Cadbury Will Spin Off, Not Sell Its US Beverage Unit
Cadbury Schweppes, the world's largest confectionery group, said on Wednesday it will focus on demerging its North American soft drinks unit and list the business in New York rather than selling it off.
The London-based company, maker of Dairy Milk chocolate, Trident gum and Halls cough drops, also said in a trading statement it had seen very strong third-quarter confectionery revenue growth of 10%.
"With an acceptable sale unlikely in the foreseeable future, the board believes it is prudent now to focus on demerging our Americas Beverages business," Cadbury Chairman John Sunderland said in the statement.
The demerger will require a number of approvals and rulings and it is estimated a demerger will not be completed before the second quarter of 2008, the group said.
The beverage business will be led by Larry Young, current chief executive of the bottling operation, as current head Gil Cassagne is resigning for personal reasons. It also said a restructuring will lead to the loss of 470 jobs in the business.
On the confectionery side, the 10% third-quarter underlying rise in revenues will give a 7% rise for the first 9 months of the year after a 6% first-half rise.
The group also warned commodity costs are expected to be around 5 to 6% higher for both its confectionery and beverage operations but hopes to offset these increases by price rises for its products.
Traders said the group's share price is seen opening up as much as 2%.