1. Evaluate Cadbury Schweppes’ prior acquisitions, which may have led Sunderland to take a very methodical look at the Adams acquisition.

2. What made Adams an attractive target?

3. Evaluate the sources of synergy between Cadbury Schweppes and Adams.

4. Evaluate Sunderland’s handling of the acquisition decision.

5. What were the risks inherent in the Adams acquisition?

The case takes the readers behind the scenes of Cadbury Schweppes’ decision to bid for Adams, the number two player in the worldwide gum business and a leader in the confectionery product industry. Cadbury Schweppes was formed in 1969 by the merger of UK-based Cadbury, and Switzerland-based Schweppes. It was no stranger to acquisitions – over the years, it had acquired carbonated soft drinks brands Canada Dry and Sunkist, Dr. Pepper and Seven-Up, as well as Orangina, non soft drinks brands like Mott’s and Snapple, confectionery such as Trebor and Bassett, and the chewing gum brand, Hollywood. The company had gone through some integration challenges in the past which the current managers were determined not to repeat with Adams. 

Adams was an attractive candidate for many reasons. Adams was strong in the Americas, where Cadbury Schweppes was weak. Adams also had the number two brand of gum, Trident, behind Wrigley’s. Adams was owned by pharmaceutical firm Pfizer, which did not have much interest in holding on to Adams, and could be enticed to sell with a good offer. Cadbury Schweppes could take Adams brands to countries where Cadbury Schweppes had a strong presence and leverage its local competencies. On the downside, Cadbury Schweppes would have to contend with other competitors for Adams business, which would surely drive up the price. Sir John Sunderland, the Chairman and CEO of Cadbury Schweppes knew he had to pay the right price for Adams. Too little, and he would lose Adams to one of his competitors. Too much, and it would be an expensive victory with expected future profits mitigated by the financial costs. This scenario would make investors and other stakeholders unhappy and could potentially cost him his job. The case offers the opportunity to review the details of the acquisition decision and to argue for or against the decision.