UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

     
Date of Report (Date of Earliest Event Reported):   December 7, 2009

Dr Pepper Snapple Group, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)

     
Delaware 001-33829 98-0517725
_____________________
(State or other jurisdiction 		_____________
(Commission 		______________
(I.R.S. Employer
of incorporation) File Number) Identification No.)
      
5301 Legacy Drive, Plano, Texas   75024
_________________________________
(Address of principal executive offices) 		  ___________
(Zip Code)
     
Registrant’s telephone number, including area code:   972-673-7300

Not Applicable
______________________________________________
Former name or former address, if changed since last report

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item 1.01 Entry into a Material Definitive Agreement.

and





Item 8.01 Other Events.

Dr Pepper Snapple Group, Inc. ("DPS") today announced that it has agreed to license certain brands to PepsiCo, Inc. ("PepsiCo") on completion of PepsiCo’s proposed acquisitions of The Pepsi Bottling Group, Inc. (PBG) and PepsiAmericas, Inc. (PAS). As part of the transaction, DPS will receive a one-time upfront payment of $900 million, before taxes and other related fees and expenses.

Under a new licensing agreement that will replace existing agreements with PBG and PAS, PepsiCo will distribute Dr Pepper, Crush and Schweppes in the U.S.; Dr Pepper, Crush, Schweppes, Vernors and Sussex in Canada; and Squirt and Canada Dry in Mexico. The new agreement will have an initial term of 20 years, with 20-year renewal periods, and will require PepsiCo to meet certain performance conditions.

Additionally, in U.S. territories where it has a distribution footprint, DPS will begin selling certain owned and licensed brands, including Sunkist soda, Squirt, Vernors and Hawaiian Punch, that were previously sold by PBG and PAS.

The one-time payment is expected to be recognized over the estimated life of the license agreement and recorded as net sales.

Net proceeds from this transaction will be used to reduce the company’s overall debt obligations in-line with its target capital structure of approximately 2.25 times total debt to EBITDA after certain adjustments.

This transaction is subject to PepsiCo obtaining regulatory approvals and completing its purchase of PBG and PAS.

A copy of the letter agreement summarizing the terms of the transaction is filed as Exhibit 10.1 to this Current Report on Form 8-K. The summary of the letter agreement in this Item 1.01 is qualified entirely by the terms and conditions set forth in the letter agreement, which is incorporated herein by reference.

A copy of the press release announcing the signing of the letter agreement is attached hereto as Exhibit 99.1 and is incorporated herein by reference.





Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

10.1 Letter agreement, dated December 7, 2009, between Dr Pepper Snapple Group, Inc. and PepsiCo, Inc.

99.1 Dr Pepper Snapple Group, Inc. Press Release dated December 8, 2009—"Dr Pepper Snapple Group Agrees to License Certain Brands to PepsiCo Following Acquisition of its Largest Bottlers"





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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

         
    Dr Pepper Snapple Group, Inc.
          
December 8, 2009   By:   James L. Baldwin, Jr.
       
        Name: James L. Baldwin, Jr.
        Title: Executive Vice President & General Counsel

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Exhibit Index


     
Exhibit No.   Description
 
10.1
  Letter agreement, dated December 7, 2009, between Dr Pepper Snapple Group, Inc. and PepsiCo, Inc.
99.1
  Dr Pepper Snapple Group, Inc. Press Release dated December 8, 2009—"Dr Pepper Snapple Group Agrees to License Certain Brands to PepsiCo Following Acquisition of its Largest Bottlers"

December 7, 2009

Dr Pepper Snapple Group, Inc.
5301 Legacy Drive
Plano, Texas 75024

Gentlemen:

This is to confirm the consent of Dr Pepper Snapple Group, Inc. (“DPS”) to the change in control of The Pepsi Bottling Group (“PBG”) and PepsiAmericas, Inc. (“PAS”) when PepsiCo purchases these two bottlers (the “Transaction”) in the previously announced transaction, subject to the following terms:

1.   Value . At closing (the “Closing”) of the Transaction, PepsiCo shall pay to DPS a one-time payment of $900 million.

2.   Condition to Closing . The Closing of the Transaction is subject to PepsiCo obtaining all regulatory approvals required for the transaction, including expiration of the waiting period required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

3.   Master Licenses . On the date of the Closing of the Transaction, DPS will issue to PBNA and PBNA shall execute, four Master Licenses (including a Master License Agreement for Abtex in the event that PepsiCo/PBNA proceeds with the acquisition of Abtex at or prior to Closing) in the form agreed to on the date hereof by the parties for certain trademark brands and territories as follows:

     
United States:
Canada:
Mexico:
  Dr Pepper, Crush and Schweppes
Crush, Schweppes, Dr Pepper, Vernors and Sussex
Squirt and Canada Dry

      Abtex: Dr Pepper, Seven Up, Sunkist, A&W, Squirt, Canada Dry, Hawaiian Punch

The Master License for Canada, Mexico and Abtex will need to be changed slightly to reflect the different brands in the respective markets. The parties agree that there will be no fair market value buyout provision contained in the Canada or Mexico Master License Agreements. The Mexico Master License Agreement will include territories in which PBG currently has executed license agreements and in the Monterey/Gomex Palacio territories in which it currently distributes the Squirt brand with Licensor’s consent.

4.   Master Licenses Effective Date . The effective date of the Master License shall be the date of the Closing. On the date of the Closing, all DPS brand rights previously licensed to PAS and PBG shall be deemed surrendered to DPS and PBNA shall cause all DPS brand licenses previously issued to PAS and PBG to be stamped “Cancelled” and delivered to DPS within 7 days.

5.   Other DPS Brands . PBNA will continue, in certain US territories as agreed by DPS and PBNA, the manufacture, sale and distribution of DPS brands not part of a Master License, i.e ., Squirt, Canada Dry

6.   Confidentiality . DPS and PBNA hereby agree that the commercial terms of this agreement will be kept strictly confidential.

7.   No Public Announcements . No public announcements will be made in regards to this letter agreement without prior agreement of DPS and PBNA; provided that either party may make such disclosure if advised in writing by counsel that it is legally required to do so. DPS and PBNA will discuss and agree on all public announcements.

8.   Closing . The Closing of the Transaction must occur not later than June 30, 2010. If the Closing does not occur prior to that date for any reason, this Letter and DPS’s consent herein, shall terminate and have no further force or effect, without any liability of either party to the other as a result of such termination.

If the foregoing is acceptable to you please indicate your agreement in the space provided below.

Very truly yours,

PepsiCo, Inc.

             
   
 
  By:   /s/ Indra K. Nooyi
   
 
       
   
 
      Indra K. Nooyi
Chairman & Chief Executive Officer
Accepted and Agreed:        
Dr Pepper Snapple Group, Inc.        
By:  
/s/ Larry D. Young
 
 
   
 
 
 
   
Larry D. Young
President & Chief Executive Officer
 

 

         
FOR IMMEDIATE RELEASE   Contacts:   Media Relations
       
Tina Barry, (972) 673-7931

Greg Artkop, (972) 673-8470

Investor Relations

Aly Noormohamed, (972) 673-6050

DR PEPPER SNAPPLE GROUP AGREES TO LICENSE CERTAIN BRANDS TO PEPSICO FOLLOWING ACQUISITION OF ITS
LARGEST BOTTLERS

Plano, TX, December 8, 2009 – Dr Pepper Snapple Group, Inc. (NYSE: DPS) today announced that it has agreed to license certain brands to PepsiCo, Inc. on completion of PepsiCo’s proposed acquisitions of The Pepsi Bottling Group, Inc. (PBG) and PepsiAmericas, Inc. (PAS). As part of the transaction, DPS will receive a one-time upfront payment of $900 million, before taxes and other related fees and expenses.

Under a new licensing agreement that will replace existing agreements with PBG and PAS, PepsiCo will distribute Dr Pepper, Crush and Schweppes in the U.S.; Dr Pepper, Crush, Schweppes, Vernors and Sussex in Canada; and Squirt and Canada Dry in Mexico. The new agreement will have an initial term of 20 years, with 20-year renewal periods, and will require PepsiCo to meet certain performance conditions.

Additionally, in U.S. territories where it has a distribution footprint, DPS will begin selling certain owned and licensed brands, including Sunkist soda, Squirt, Vernors and Hawaiian Punch, that were previously sold by PBG and PAS.

“We’re confident that this new arrangement, which maintains our balanced and flexible routes to market, is in the best interests of our brands and our shareholders,” said Larry Young, president and CEO of DPS. “It demonstrates the value and growth potential of these great brands and strengthens our third-party route to market while benefiting our own Packaged Beverages business. We’re excited to be working with PepsiCo and are confident in the continued long-term growth of our business.”

The one-time payment is expected to be recognized over the estimated life of the license agreement and recorded as net sales.

Net proceeds from this transaction will be used to reduce the company’s overall debt obligations in-line with its target capital structure of approximately 2.25 times total debt to EBITDA after certain adjustments.

This transaction is subject to PepsiCo completing its acquisitions of PBG and PAS.

Forward-looking statement
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation, and cost and availability of raw materials. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “may,” “will,” “expect,” “anticipate,” “believe,” “estimate,” “plan,” “intend” or the negative of these terms or similar expressions. These forward-looking statements have been based on our current views with respect to future events and financial performance. Our actual financial performance could differ materially from those projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and our financial performance may be better or worse than anticipated. Given these uncertainties, you should not put undue reliance on any forward-looking statements. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2008, and our other filings with the Securities and Exchange Commission. Forward-looking statements represent our estimates and assumptions only as of the date that they were made. We do not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, after the date of this release, except to the extent required by applicable securities laws.

About Dr Pepper Snapple Group
Dr Pepper Snapple Group, Inc. is the leading producer of flavored beverages in North America and the Caribbean. Our success is fueled by more than 50 brands that are synonymous with refreshment, fun and flavor. We have 6 of the top 10 non-cola soft drinks, and 9 of our 12 “power brands” are No. 1 in their flavor categories. In addition to our flagship Dr Pepper and Snapple brands, our portfolio includes Sunkist soda, 7UP, A&W, Canada Dry, Crush, Mott’s, Squirt, Hawaiian Punch, Penafiel, Clamato, Schweppes, Venom Energy, Rose’s and Mr & Mrs T mixers. To learn more about our Plano, Texas-based company and our iconic brands, please visit www.drpeppersnapple.com .

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