Jefferies Cuts Price Target on Dr Pepper Snapple Group (DPS) Following Announced Bai Acquisition
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Jefferies maintained a Hold rating on Dr Pepper Snapple Group (NYSE: DPS), and cut the price target to $95.00 (from $96.00), following the company's announced acquisition of Bai. DPS announced that it would acquire Bai Brands for $1.7B, $1.3B ex-tax benefits. The deal will add ~$130M of incremental sales to DPS's 2017 sales.
Analyst Kevin Grundy commented, "DPS announced the acquisition of Bai this morning for $1.7B ($1.3B ex-tax benefits), 65% of whose distribution DPS already controlled. While DPS paid a very healthy multiple (~20x FY18 EBITDA), we view the acquisition favorably, given (i) losing distribution of Bai could have been ~$0.15 (3%) dilutive to EPS and 1.5 pts dilutive to org sales growth; and (ii) Bai is a strong, rapidly-growing brand and a sensible addition to DPS's portfolio. Hold, $95 PT."
Shares of Dr Pepper Snapple closed at $87.50 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst PT Change, Mergers and Acquisitions
Related EntitiesJefferies & Co, Definitive Agreement
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