LONDON: Cadbury Schweppes is reported to be on the verge of splitting itself into two businesses in a potential £16 billion ($30.9bn; €23.4bn) break-up. The UK-headquartered confectionery and soft drinks giant has been under increasing pressure to "maximise shareholder value" since it was revealed that a group of investors led by American billionaire financier Nelson Peltz had acquired a 2.98% stake.
In response to Peltz's demands - which emulate similar manoeuvres by the interventionist shareholder at US burger chain Wendy's and H J Heinz - Cadbury is understood to have instructed its bankers to plan for a break-up as the best way to repel a potential hostile bid for the group.
The core confectionery business will include Dairy Milk chocolate and Trident chewing gum, while the soft drinks spin-off, largely US based, will house the 7-Up and Dr Pepper brands. Further details will accompany the group's trading update on June 19.
Says Ceo Todd Stitzer: "Separating these two great businesses will enable two outstanding management teams to focus on generating further revenue growth, increasing margin and enhancing returns for their respective shareowners."
Peltz's similar tactics last year at Heinz resulted in the company's management announcing a significant cost-cutting plan and a share buyback programme [WARC News: 05-Jun-06].
He also shoehorned two directors on to the Heinz board to ensure it refines its business portfolio and steps up marketing expenditure.
Data sourced from The Times Online (UK); additional content by WARC staff