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Cadburys looks much sweeter to investors split into two

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15/03/2007

Cadbury Schweppes has confirmed that it plans to split itself up into two parts, separating the confectionery from the drinks side of its business.

The Americas Beverages sector is to split off from the more traditional Cadbury side – familiar to UK consumers with brands like Dairy Milk – and there have been reports that private equity groups are expressing interest in the drinks operation.

Cadbury said it would provide more information on the proposed demerger at its trading update briefing on 19th June.

“We believe now is the moment to separate and give both management teams the focused opportunity to extract the full potential inherent in these excellent businesses,” said Cadbury chairman Sir John Sunderland.

Shares in the company have risen 10% in this week alone as American businessman Nelson Peltz bought a stake, provoking much takeover speculation.

“I’m not surprised at Peltz’s intervention, as he has expressed an interest in hiving off the drinks arm and driving it forward apart from Cadbury,” said a senior commercial analyst at a City brokerage.

Cadbury’s is the third largest carbonated drinks company in the world by sales volume, behind Coca-Cola and Pepsi. It bought its US drinks business in 1995 for £1.8bn and in 2006 the division made profits of £584m.

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