Cadbury Pulls Plug on Drinks Sale

11 October 2007

LONDON: Confectionery and soft drinks giant Cadbury Schweppes has ditched plans to sell off its US beverages unit amid "difficult" credit conditions.

The fall-out from the UK-headquartered firm's decision to abandon a sale in favour of a spin-off has already resulted in the resignation of Gil Cassagne as president/ceo of the American Beverages unit and his replacement by Larry Young.

The firm, whose drinks brands include Dr Pepper, 7Up and Snapple, says it will seek an IPO for the unit on the New York Stock exchange, after the US credit squeeze derailed the possibility of a £7 billion ($14bn; €10bn) acquisition by private equity investors.

The company says: "While the board continues to be committed to the principle of maximising shareholder value, it does not believe current market conditions will facilitate an acceptable sale process in the foreseeable future."

Cadbury's trading in the third quarter has been particularly good in the confectionery business, where brands include Cadbury's Dairy Milk chocolate and Trident gum.

UK sales bounced back 12% from a weak performance in 2006 when an outbreak of salmonella was linked to Cadbury products, leading to the recall of more than a million chocolate bars.

Sales in the US rose 14%, driven by a 3% increase in the group's share of the chewing gum market.

Data sourced from BBC Online; additional content by WARC staff