Cadbury's to de-merge beverages business split

Cadbury Schweppes says that it would de-merge its US beverages business, Cadbury Schweppes Americas Beverages (CSAB) that makes 7Up and Dr Pepper, in the event of a suitable bid not emerging for its sale.

On 15 March 2007, Cadbury Schweppes had announced its intention to separate its confectionery and beverages businesses that handles its UK parent's core beverage business in the US and is the largest division of Cadbury Schweppes, ending its four decades as a combined company.

Analysts have valued the beverages unit as a separate entity at £7 billion and the chocolate and chewing gum business at around £9 billion.

Cadbury Schweppes is the world's largest confectionery company with strong beverages businesses in North America and Australia with a current market value estimated at about £12.5 billion.

With origins stretching back over 200 years, Cadbury Schweppes' products, include brands such as Cadbury, Schweppes, Halls, Trident, Dr Pepper, Snapple, Trebor, Dentyne, Bubblicious and Bassett.

In a statement Cadbury Schweppes said that the sale process for its Americas Beverages is ongoing, and that interest in the business remains strong. "However, the leveraged debt markets have experienced extreme volatility in recent days. As a result, a decision has been taken to extend the sale timetable to allow bidders to complete their proposals against a more stable debt financing market."

The Coca-Cola Co, fresh from its $4.1 billion acquisition of Glaceau, maker of Vitaminwater, has been weighing plans to acquire Snapple iced tea brand from Cadbury Schweppes PLC.

The statement was accompanied by the company reporting a 6 per cent decline in profits in the first half of 2007 to £180 million for the confectionary business, despite sales having grown by 6 per cent to £2.3 billion. The company attributed the fall in profits to rising costs, including the marketing of the launch of its Trident chewing gum.

Cadbury's bottom-line was also impacted by a £1 million fine last month after admitting at a magistrate's court in Birmingham to its failure to immediately alert authorities that it may have had reason to believe some of its chocolates may have been infected with salmonella. (See: Cadbury pleads guilty in salmonella case) The Coca-Cola Co., which had acquired Glaceau, maker of Vitaminwater for $4.1 billion, was weighing plans to acquire Snapple iced tea brand from Cadbury Schweppes PLC. (See: Coke weighing Cadbury's Snapple acquisition) As was the Tata Group, that had divested its 30 per cent stake in Glaceau to The Coca-Cola Company for $1.2 billion. (See: Tata Eyeing Cadbury's Snapple)