Lion Capital and The Blackstone Group partnered to acquire Orangina, a European soft drink company owned by Cadbury Schweppes, for €1.848 billion. Lion sought the deal to enter the large private equity deal space, but needed a partner like Blackstone due to the size of the deal relative to Lion's fund. Blackstone gained access to its first European consumer deal but lacked experience, so partnering with Lion provided strategic and industry expertise. However, both firms were concerned about overpaying through the auction process and worried that other bidders may drive the price even higher. While Orangina offered opportunities for revenue and profit growth, the risks of the competitive auction process meant the deal may not

1. Lion Capital & The
Blackstone Group: The
Orangina deal
Private Equity Club Deal
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2. Agenda
1. Deal Presentation
2. Origina Value
3. Why would Lion do a deal with Blackstone?
4. Why would Blackstone do one with Lion?
5. Benefits and risks for each institution?
6. Acquisition price justification?
7. Is Orangina a good deal?
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3. Orangina Value
 Based on APV method we found an enterprise value of
$2,34 B;
 As we know the bid Lion and Blackstone at November
16, 2005 was €1,848 B ( 7,3X EBITDA );
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4. 1. Deal Presentation
 In September 2005, Cadbury Schweppes (global confectionary
and beverage company) officially announced the divestiture of its
corporate division Orangina.
 Third position on the European soft-drinks market (€952M of
Sales).
 Orangina Group is an umbrella for soft-drinks companies owned
by Cadbury Schweppes.
 Most of these companies are strong brands on different European
regional and local markets and segments of the European soft-
drinks market.
 Main regional markets: France, Spain, Germany.
 Operational assets include Bottling and Concentrate plants.
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5. 1. Deal Presentation
 Sale orchestrated by an auction, handled by Goldman Sachs.
 Initially 40 potential acquirers interested, most of them financial acquirers
(Pepsi was the leading strategic acquirer).
 Price range between €1,544-1,85 B.
 First bidding on October 10, 2005.
 Only 7 bidders.
 Price around €1,93Bion.
 Second bidding on November 16, 2005.
 4 bidders
 Price range between €2-2,25 B.
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6. 2. Why would Lion do a deal
with Blackstone?
 Orangina is the perfect opportunity to realize an « iconic brand
with Billion-euro price tag » deal.
 Thus the opportunity to enter the Private Equity industry big
players circle, to set up their new entity on the market, and achieve
their « world’s pre-eminent investor in the consumer sector »
objective.
 Experience and know how in consumer deals to succeed, but
limited by the size of their fund (€820 M).
 Need a « financial partner » with a strong reputation to jump on
this kind of deal.
 Private Equity heyday, abundance of funds, lot of contenders,
deals price rise easily.
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7. 3. Why would Blackstone do
one with Lion?
 Orangina is the perfect opportunity to realize its first consumer deal for the London
office.
 Thus the opportunity to set further the brand on the European market, and
strengthen its position of global player.
 Has a size advantage (fund >$14B) , but lack of know how and experience on
specialized industry segments and on the European market.
 In need of strategic partners to overcome these lacks, and ensure the good
conduct of the deals.
 Javier Ferrán, Lion employee, had deep personal contacts in the industry from his
days at Bacardi, as CEO.
 <<His presence gave Lion a unique insight to the deal>>
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8. 4. Benefits and risks for Lion
 Benefits:
 Can target Billion price tag opportunity.
 Keep spare funds for other opportunities.
 Strengthen its name and reputation in the industry.
 Risks:
 If things go wrong, the fund would end in a dangerous situation, as the deal has a
bigger proportion than the fund.
 Lea claims: “we were both at the pot of our range. We were worried that the 2 other
finalists might partner”;
 Are they pay the right price? Is not overpaid?
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9. 4. Benefits and risks for
Blackstone
 Benefits:
 Has a strategic partner with the know how and the experience needed to ensure
the good conduct of this deal.
 Reduce its risk exposure on the deal.
 Strengthens its industry position of global player.
 Risks:
 If things go wrong, it will mainly have to bear the extra costs as the strategic partner
is a relative small fund compare to the deal.
 Blitzer said: “Our price was roughly €1,85B. How conceivable was it that other firms
may be higher? If Cadburry took it, maybe we were too high.”
 Are they pay the right price? Is not overpaid?
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10. 5. Acquisition price
justification?
 Last bid price of €1,848 B.
 Strong iconic brands conferring a degree of price inelasticity (if marketing investment
supporting the premium price).
 Good synergies and greater profitability potential if a proper restructuration is set up.
 Beverage industry is changing, carbonates were falling, private label, stills and water
rising and like Blitzer, from BlackStone, said “We can help our companies rise to this
challenge and create opportunities to grow;
 This deal offers rooms to create value.
 Perfectly fits to the « strong brands that have been undermanaged » status, that Lion is
looking for.
 …also the fact that the sale is made through an auction, with a lot of contenders
involved, which put an upward pressure on the acquisition price, specially as the seller is
conscious of the value of its division, and its bargain power to drive the price up.
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11. 6. Is Orangina a good deal?
 Orangina is a perfect investment opportunity for a Private
Equity fund, as it offers concrete opportunities and rooms for
revenue growth and profitability increase.
 Plus it perfectly fulfill the Blackstone and Lion criteria's, that
will allow them to hit their goals.
 But on the other hand the auction-sale process as led the
acquisition price to rise to a point where the partnership is at
the top of its range.
 If a third round would happen, and there is a high probability
as the target is also a perfect acquisition opportunity for a
strategic buyer, driving the price upper it would be no more a
good deal for the partnership.
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12. Q&A
Thank you!
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