Portfolio

Dr Pepper Snapple Group (2008 – 2010)

Dr Pepper Snapple Group (“DPS”) is a one of North America’s leading refreshment beverage companies, marketing more than 50 brands of carbonated soft drinks, juices, teas, mixers, waters and other premium beverages. In May 2008, DPS became a stand-alone, publicly traded company as the result of a spin-off by Cadbury.

After the spin-off, Trian believed DPS offered one of the most compelling values in the consumer staples space – the company generated higher margins and cash flow that the average food company, received over 75% of its volume from its #1 and #2 ranked brands, and was the third largest player in the resilient North American refreshment beverage business. Trian also believed that many in the investment community viewed DPS primarily as a bottler, despite generating less than 5% of profit from bottling, and that the company’s shares were significantly undervalued. In December 2008, Trian increased its interest in DPS and filed a Schedule 13D with the SEC. Trian’s goal was to work with DPS to help improve its strategic focus, operational execution and to be more efficient with capital outlays.

In February 2009, at Trian’s suggestion, DPS added Mike Weinstein as a director of the company. Mr. Weinstein was a director of H.J. Heinz Company and previously helped turn Snapple around, with Trian’s Principals, as CEO of the Triarc Beverage Group. In 2009, DPS increased its adjusted segment operating profit by 17% and repaid $550 million of its debt obligations. Additionally, the company’s board instituted its first quarterly dividend and authorized a $1 billion share buyback program.

Trian exited its investment in DPS in November 2010. Over the course of Trian’s investment, DPS grew market share in the core flavored carbonated soft drink brands (Dr Pepper, A&W, Sunkist, 7Up and Canada Dry), realized $70 million of cost cutting initiatives announced in 2007, increased margins and free cash flow, and signed strategically beneficial distribution agreements with Coke and Pepsi, resulting in approximately $1.6 billion gross proceeds to DPS.

Sector: Consumer

Company Website: https://www.drpeppersnapplegroup.com/