Taking back some Dr Pepper bottling may be a possibility, he said. PepsiCo agreed [image-nocss] this month to buy the bottlers for about $7.8 billion, and has said the transaction may close by yearend.
The company has yet to begin negotiations with PepsiCo to renew the agreements, Young said.
The contracts cover about a quarter of the amount of Dr Pepper sold in the United States. They may result in as much as $350 million in annual gross profit for PepsiCo, Judy Hong, an analyst with Goldman Sachs Group Inc., New York, told the news agency.
"Everything's feasible," Young, 54, said August 19 in an interview with Bloomberg. "We always want our brand where it's going to be in the strongest hands so that we continue our growth."
Young said he is "very happy" with the way the system is set up now. He said Dr Pepper Snapple would not owe termination fees if it canceled the agreements after a change in control of the distributors.
Young said he does not know if PepsiCo is interested in buying the Crush orange soda brand, which Pepsi Bottling began distributing for Dr Pepper Snapple this year.
Bottlers for Purchase, N.Y.-based PepsiCo and Atlanta- based Coca-Cola Co. last year distributed 73% of the Dr Pepper sold in the United States, according to a Dr Pepper Snapple regulatory filing cited by the news agency.
The brand helped the Plano, Texas-based company take U.S. soda market share last year from Coca-Cola and PepsiCo, according to Beverage Digest, an industry newsletter. The publication estimated that 27% of Dr Pepper in bottles and cans is distributed by Coca- Cola Enterprises Inc., 18% by Pepsi Bottling and 7.4% by PepsiAmericas. Dr Pepper Snapple declined to comment on the data, Bloomberg said.
The renegotiation could set up a bidding war between PepsiCo and Coca-Cola Enterprises, Coca-Cola's largest bottler, Hong said. A sale of the rights to the contracts could fetch $2.5 billion or more before taxes or termination payments, she estimated.
Dr Pepper Snapple "has significant negotiating leverage with a potential buyer," Hong wrote in an August 13 note.
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