Jefferies Cuts Price Target on Dr Pepper Snapple Group (DPS) Following Announced Bai Acquisition

November 23, 2016 8:45 AM EST
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Price: $91.21 +0.56%

Rating Summary:
    5 Buy, 17 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 24 | Down: 17 | New: 14
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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."

For an analyst ratings summary and ratings history on Dr Pepper Snapple click here. For more ratings news on Dr Pepper Snapple click here.

Shares of Dr Pepper Snapple closed at $87.50 yesterday.

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