Cadbury to sell European Beverage segment to consortium for €1.85 billion

21/11/05 Cadbury Schweppes will sell its Europe Beverages segment to a consortium acting on behalf of the funds managed by Blackstone Group International and Lion Capital LLP for €1.85 billion. Cadbury, the world's third-biggest soft-drink maker, is concentrating on its confectionery unit and the faster-growing U.S. beverage market. The company is spending more on new drinks and advertising in the U.S. to compete with Coca-Cola Co. and PepsiCo Inc. First-half sales at the European beverage business fell 1 percent as the U.S. unit reported a 5 percent gain.

Cadbury Schweppes will now undertake the appropriate communication and consultation with relevant employee representatives. Following the completion of this process, Cadbury Schweppes will be able to accept the Consortium's binding offer to buy Europe Beverages. If Cadbury Schweppes does not accept this binding offer, it will be required to pay a termination fee to the Consortium of approximately 5% of the offer value and retain the Europe Beverages business for a period of twelve months.

If Cadbury Schweppes accepts the Consortium's binding offer, the transaction will be conditional on European Union regulatory approval, and is expected to complete in early 2006.Goldman Sachs acted as sole financial advisor to Cadbury Schweppes in relation to this transaction.Gross proceeds from the offer for Europe Beverages will be €1.85 billion (£1.27 billion). Expenses and tax payable are not expected to be more than 10% of the gross proceeds. The proceeds will be used to reduce the Group's net debt, which at June 2005 was £4.3 billion.

Europe Beverages' principal products are carbonated soft drinks, mineral waters and still drinks.  Its main brands are Schweppes, Orangina, TriNa, Oasis and La Casera which account for around 75% of sales. Other brands include Apollinaris, Pampryl, Gini and Vida.  Products are sold across Continental Europe, with some sales in the UK, parts of North and West Africa and the Middle East.  Sales are concentrated in three countries, France, Spain and Germany, which account for around 85% of total sales.The business has wholly owned bottling operations in Germany, Spain, Portugal and Belgium and a production arrangement with San Benedetto in France. In other countries, the business operates through licence agreements with third party manufacturers and distributors. The business has around 3,000 employees.

On an IFRS basis, Europe Beverages' revenue, underlying EBITDA and underlying operating profit for the financial year ended 2 January 2005 were £653 million, £139 million and £116 million respectively.  The value of Europe Beverages' gross assets was £994 million at 19 June 2005 and net assets as at the same date were £644 million. Todd Stitzer, CEO of Cadbury Schweppes said:  "I'm delighted that within such a short time we have achieved a firm offer for Europe Beverages at a price which reflects the quality of its brands and the strength of its management team. Following completion of a deal, we will be able to focus on our faster growing confectionery and other beverage businesses."