Cadbury Schweppes to Sell Beverage Unit

Cadbury Schweppes is expected to announce Tuesday that it will sell its U.S. beverage unit, which includes 7-Up, Dr Pepper and Snapple. Since Cadbury made public in March that it was planning to split its confectionery and soft drink businesses, its stock has gone up 30%. It was unclear at the time of the announcement whether the company planned to sell the $15.8 billion drinks business or spin it off. On Friday, the last day to submit bids, Cadbury received offers from three consortia: Bain Capital Partners, Thomas H. Lee Partners and the Texas Pacific Group; Blackstone, KKR and Lion Capital; and a group led by Canadian private-label beverage maker Cott. It is not yet known which offer was highest. A Sunday Times of London report said Cadbury is evaluating a £300 million cost-cutting plan that would entail the cutting of 5,000 jobs. Analysts speculate that the beverages sale will enhance Cadbury's ability to boost its confectionery business, possibly through an acquisition of Hershey (which has shown itself resistant to takeover attempts). Another possibility is that the Cadbury confectionery unit will itself be bought out, possibly by Kraft.

Sources: New York Times
Commentary: Private Equity Eyes Cadbury's U.S. Beverages, Shares Higher • Barron's Mid-2007 Analyst Roundtable • Cadbury Schweppes: Activist Holder Peltz is Moving Fast
Stocks/ETFs to watch: Cadbury Schweppes plc [ADR] (CSG), The Hershey Company (HSY), Kraft Foods Inc. (KFT). Competitors: Coca-Cola Co. (KO), Pepsico, Inc. (PEP), Hansen Natural (HANS), Jones Soda (JSDA), National Beverage (FIZ)

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