- 6 - Second, Cadbury had the contractual right to disapprove any sale of Bottlers’ franchise rights. Cadbury insisted the franchise rights be sold only to Coke or Pepsi so that Cadbury products would be placed in Coke or Pepsi vending machines. Third, buying the bottling facilities would cause friction with Bottlers’ limited partners. Around 1989, Bottlers replaced some of its original LBO financing by selling equity interests in a limited partnership to approximately 50 independent investors. The limited partners and the management group had different views on how to run Bottlers. The limited partners wanted an early high return, while the management group emphasized long-term growth. These divergent views led to many heated communications, threats, and a proxy fight. The management group decided, given these internal and external business reasons, that it was best to lease the facilities rather than own them outright. The management group wanted a third party to buy the bottling facilities from CPA7, assume the lease, and then renegotiate the lease to remove the rent escalators. A Buyer Bottlers identified G&K Properties, Inc. (G&K) as a potential buyer that would lease the facilities to Bottlers on renegotiated (and more favorable) terms. G&K was an unrelated Iowa real estate development company with which Bottlers hadPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011