Cadbury Sells its North American Beverage Business
Cadbury announced plans to separate its drinks and candy businesses in mid-March, but had not indicated whether it would sell the beverage business or spin it off to shareholders.
19/06/07 Cadbury Schweppes PLC is expected to announce on Tuesday that it will sell its North American beverage business, which includes Snapple teas, Dr Pepper and 7-Up, The New York Times reported Monday.
Cadbury announced plans to separate its drinks and candy businesses in mid-March, but had not indicated whether it would sell the beverage business or spin it off to shareholders.
The Times, citing unidentified people close to the matter, said the company had received at least three bids for the business as of a deadline last Friday. The Times said the business was worth about $15.8 billion.
The newspaper said Cadbury has told investors it would provide an update on the breakup process on Tuesday.
A spokeswoman for Cadbury, Winnie Lerner, said the British company had no comment on the report.
The Times reported that bids submitted as of Friday came from two private equity groups and from Canada's Cott beverage company. One of the groups consisted of BainCapital, Thomas H. Lee Partners and the Texas Pacific Group. The other group was reported to include the Blackstone Group, Kohlberg Kravis Roberts and Britain-based Lion Capital.
A spokeswoman for Bain Capital, Charlyn Lusk, said the company had no comment. A spokesman for Kohlberg Kravis Roberts, David Lilly, said the firm had no comment. A spokeswoman for Cott said it would not comment on speculation.
Carbonated soft drinks contribute 60 percent of the Cadbury drinks unit's profit, and it sees a lot more potential to grow its carbonated business, Jim Johnston, the beverage unit's executive vice president of sales, said last week at a Beverage Digest conference in New York. While the soft drinks business overall has declined, Cadbury has made it a focus of its growth.
"We absolutely reject the idea that the decline in CSDs is inevitable," Johnston said.
Market leaders The Coca-Cola Co. and PepsiCo Inc. have diversified their beverage portfolios beyond colas, with Coca-Cola most recently paying $4.1 billion to buy Glaceau, maker of VitaminWater.
Lerner said Cadbury also had no comment on a Sunday Times of London report that the company would be cutting 5,000 jobs as part of a cost-cutting program.
Cadbury has plans to launch an energy drink called Accelerade as well as a mineral water version of the Mexican drink Penafiel.
