Cadbury to split candy and beverage businesses

March 27, 2007
Under pressure from the same investor who pushed changes on Heinz last year, Britain's Cadbury Schweppes PLC announced plans to split its candy and beverage businesses to improve the value of its stock.

Under pressure from the same investor who pushed changes on Heinz last year, Britain's Cadbury Schweppes PLC announced plans to split its candy and beverage businesses to improve the value of its stock. However, the move also could make both halves easier to take over.

The company claims to be the largest confectionery business in the world, with a 10 percent global market share. The candy side will continue to own such brands as Cadbury, Dairy Milk chocolate, Halls Trident and Dentyne.

The beverage side, which is called Americas Beverages, focuses on non-cola carbonated soft drinks (including Dr Pepper, 7 UP, Sunkist and A&W) and non-carbonated soft drinks (including Snapple, Mott's, Hawaiian Punch and Clamato). While the worldwide candy business has been beefed up and the beverage unit made focused acquisitions, “Since 1999, we have sold our beverages businesses in over 180 markets. In 2006, we sold our beverages operations in Europe, Syria and South Africa for £1.4 billion,” the company said in a statement.

“The board believes Americas Beverages now has the appropriate platform to exploit the benefits of focus as a stand-alone business,” the statement continued. “Therefore, it is the right time to pursue a separation of Americas Beverages and we are evaluating the options to achieve this.”

The predecessor companies trace their origins to 1783 when Jacob Schweppes created a process for carbonating mineral water in Switzerland, and to 1824 when John Cadbury began selling cocoa and chocolate in Britain. The companies merged in 1969.

Cadbury Schweppes earlier acknowledged U.S. investor Nelson Peltz and his Trian Fund had acquired a 3 percent stake in the company. Analysts were anticipating Peltz would urge changes, including a possible split, as he had pushed upon Heinz after he had amassed a 5.5 percent stake in that company.
Cadbury CEO Todd Stitzer said the company met with its major shareholders, including Peltz, to discuss options, which included the separation. Further details on the split are expected in a financial update scheduled for June 19.

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