Rumors are floating around in the news that Cadbury's (NYSE:CSG) beverage business will be paired with Cott (NYSE:COT) once Cadbury splits its beverage business from the candy business.
Cott is not much of a growth business, but it does have healthy cash flow from its focus on providing retailers and grocery stores with private label beverages. Cadbury, on the other hand, has a slightly higher growth rate from its Dr. Pepper, 7Up, and non-carbonated brands such as Snapple. A combination of these two companies would be mostly about scale in bottling and distribution and potential cost savings as both already have operations in North America and Europe.
Whether or not Cott and Cadbury combine, they will still be well behind Pepsico (NYSE:PEP) and Inside Value selection Coca-Cola (NYSE:KO) in the world of beverages. But every little bit of operating leverage can help in the beverage business, so it's tough to argue with the logic of this potential pairing.
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Nathan Parmelee has no ownership stake in any of the companies mentioned. The Motley Fool has an ironclad disclosure policy.
