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BREAKFAST WITH THE FOOL
Triarc Sells Snapple to Cadbury Schweppes

By Brian Graney (TMF Panic)
September 18, 2000

For the third time in just six years, the ownership of ice tea and beverages maker Snapple is changing hands. This morning, Triarc Companies (NYSE: TRY) said it is selling its Snapple Beverage Group to Britain's Cadbury Schweppes (NYSE: CSG) for a total of $1.45 billion, including $910 million in cash and $420 million in assumed debt. Triarc expects to realize a larger than $700 million gain from the sale (or more than $16 per share), which the company intends to plow into investments in new businesses.

When Triarc bought Snapple from Quaker Oats (NYSE: OAT) in 1997, the unit was valued at a mere $300 million, a far cry from the $1.7 billion that the oatmeal maker had originally paid for the brand at the height of the premium ice tea craze in 1994. However, Snapple's value today is hard to discern, considering that Cadbury Schweppes is acquiring all of Triarc's beverage brands, not just Snapple. Also crossing the Atlantic will be premium brands Mistic and Stewart's and soft drink brands Royal Crown, Diet Rite, RC Edge, and Nehi.

Still, Triarc is considering its three-and-a-half year Snapple investment as a win, saying it has "realized substantial value" through today's sale. After the transaction, Triarc will emerge as a restaurant franchising pure play focused on its Arby's, T.J. Cinnamons, and Pasta Connections brands. The company will also sport a stronger balance sheet, with excess cash of $400 million well exceeding total debt of only $20 million.

News to Go

British Telecommunications (NYSE: BTY) confirmed that it is in discussions with AT&T (NYSE: T) regarding ways to broaden the relationship between the two companies, which already cooperate through their joint Concert service for multinational companies and their Advance venture for international wireless services. The speculation is that these ventures may become separate, stand-alone companies. British Telecom said that it will have more to say about the business review at an unspecified time later this year.

Voice and data services provider ICG Communications (Nasdaq: ICGX) warned that revenues and EBITDA (earnings before interest, taxes, depreciation, and amortization) will come in much lower than expected this year and next as it moves to address "serious" customer service issues. The company also said that its capital and corporate expenditures and line installations are also being cut back as it slows its expansion plans, which will nonetheless still require additional funding.

Drug developer Abbott Laboratories (NYSE: ABT) reported late Friday that the Food and Drug Administration has approved the company's Kaletra protease inhibitor for treating HIV after an accelerated review. According to the company, study data indicate that Kaletra proved effective for almost two years when used in combination with other antiretroviral therapies by HIV patients.

Business and information technology consulting firm American Management Systems (Nasdaq: AMSY) warned that slower revenue growth and investments in strategic initiatives will lead to lower-than-expected financial results in Q3 and Q4 of this year. In Q3, EPS is seen coming in between $0.28 and $0.33, down from last year's $0.43. For the full year, EPS will be between $1.45 and $1.50 compared to $1.61 a year ago.

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