News: Cadbury Spinning off Drinks

October 10, 2007/London/MarketWatch and October 10, 2007/Plano, Texas/PR Newswire -- U.K. confectionery giant Cadbury Schweppes said Wednesday it is now planning to spin off its U.S. soft-drink unit through a stock listing as conditions in the debt market remain too tough for a sale, adding it has seen "very strong" growth in candy sales in the latest quarter. Cadbury announced in March that it would separate the unit in question, which owns brands including Snapple and Dr Pepper, and later said the separation would most likely be through a sale after reportedly receiving strong interest from private-equity groups. However, in July, the company was forced to extend the timetable for making a transaction, due to worsening debt-market conditions. On Wednesday, Cadbury said markets have not picked up. "While the board continues to be committed to the principle of maximizing shareowner value, it does not believe current market conditions will facilitate an acceptable sale process in the foreseeable future," the company said. "Accordingly, our focus is now on demerging our Americas beverages business," it noted. The business will be listed on the New York Stock Exchange through an issue of shares to existing shareholders. The spin-off will not be completed before the second quarter of 2008, Cadbury said. Following the demerger, Cadbury will continue to be led by CEO Todd Stitzer and chief financial officer Ken Hanna. The group said that Gil Cassagne, head of its U.S. beverages business, has decided to resign for personal reasons and that the business will now be run by Larry Young, currently CEO of the group's bottling operations. Bear Stearns analyst Simon Marshall-Lockyer said he believes the spin-off plan will be viewed as a disappointment, but he added it at least provides some much-needed clarity. Investors have been expecting to receive around 6.5 billion pounds to 7 billion pounds from a sale, he noted. Young said, "This is a very exciting day for Americas Beverages. We have a strong business and an established market position in the nonalcoholic beverages category. As an independent company, we are poised for continued success because of our preferred brands, our integrated business model and our heritage of innovation. "I would also like to take this opportunity to express our thanks to Gil Cassagne, who has done an outstanding job leading the business and making it the success that it is today." Young most recently served as president and chief operating officer at Cadbury Schweppes Bottling Group, a division of Cadbury Schweppes Americas Beverages. He joined Cadbury in April 2006 through the company's full acquisition of the Dr Pepper/Seven Up Bottling Group, where he had been president and CEO since 2005. Since that time, he has played a central role in helping to create a new business model, with CSAB and the Bottling Group merging to become one integrated beverage company. Prior to joining the Bottling Group, Young served more than 25 years at Pepsi. In a career spanning more than 30 years and several continents, he has produced and sold virtually every type of beverage, from soft drinks and tea to milk, water, and juice. Americas Beverages manufactures and distributes flavored carbonated beverages, including Dr Pepper, 7UP, A&W and Canada Dry. The company's noncarbonated brands include Snapple, Mott's and Hawaiian Punch. In addition, Americas Beverages' own fully-integrated bottling business enables it to control its distribution network and route-to-market. This business contributed around 30% of Americas Beverage' revenues in 2006. The majority of the Bottling Group's revenues come from the bottling and distribution of Americas Beverages' own brands. The business operates in the U.S., Canada, Mexico and the Caribbean, with more than 80% of revenues coming from the United States. "Americas Beverages' record of success, coupled with the opportunity to focus on driving the business toward independence, makes it a very exciting time to be taking the helm of this great company," Young said. "Together with the company's leadership team, I look forward to writing the next great chapter in its history."

From the October 22, 2007, Prepared Foods e-Flash