Lion Blackstone Merger

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REV: FEBRUARY 20, 2007 JOSH LERNER ANN LEAMON Lion Capital and the Blackstone Group: The Orangina Deal On the rainy London evening of Thursday, November 17, 2005, two men waited for a phone call. Although this was happening all over the city, the situation and the stakes were different here. Lyndon Lea, managing partner of Lion Capital, and David Blitzer, a senior managing director at the Blackstone Group’s London office, wanted to offer a deal that might make everyone’s life much easier to Todd Stitzer, CEO of Cadbury Schweppes. The night before, they’d been told Stitzer would see them that day. Day was slipping into night and there had been no call. Lea at Lion, formerly Hicks, Muse Europe, had just closed a €€ 820 million fund. He had partnered with the London office of U.S.-based Blackstone, which had raised over $14 billion for private equity investing in its history1, in an auction for Cadbury Schweppes European Beverages (known for the purposes of this case as Orangina). Along with Orangina in its distinctive bulbous bottle, this European division of the Cadbury Schweppes global confectionary and beverages company owned such brands as Apollinaris water, Schweppes tonic and soda water, and a host of regional brands. According to rumors on the street, it had long been “about” to be sold. Cadbury had finally made the divestiture official in September 2005. Since then, the Lion-Blackstone consortium had gone through two rounds of bidding as the pool of contenders fell from 40 to seven to three. Orangina had the potential to be a signature deal for both firms: the first consumer deal for Blackstone’s London office and an important win for newly formed Lion, signaling its arrival in the realm of iconic brands with billion-euro price tags. Both firms, however, needed to avoid a third round of bidding. They were at the upper range of their valuation,

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