LONDON (MarketWatch)/March 15, 2007 -- All it took was a little push.

Just two days after Cadbury Schweppes (CBRY) (CSG) said that the activist ex-owner of Snapple, Nelson Peltz, had bought a 3% stake, the company announced a far-reaching plan to break up the world's top confectionary business from the Americas beverage division.

"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 Chairman John Sutherland in a statement.

London investors cheered the news, pushing Cadbury Schweppes shares up 3% to 620 pence. Cadbury's U.S.-traded shares also were 3% higher.

The stock has now jumped 15% over the past four sessions and is just below the 623 pence break-up value that Cadbury's adviser, Goldman Sachs, suggested when news of Peltz's stake first emerged.

The maker of Dr Pepper and 7 UP soft drinks and Snapple iced tea said it's built critical mass and strengthened its route to market by acquiring third-party bottlers. That unit had an operating profit of 584 million pounds ($1.13 billion) on revenue of 2.57 billion pounds last year.

CEO Todd Stitzer said the company hasn't received any interest as yet from outside bidders for the division. Private-equity groups Lion Capital and Blackstone Group are considering launching bids, The Times (of London) newspaper reported Thursday.

At the same time, Cadbury has started an "intensive review" of its global confectionary-manufacturing footprint to bring selling, general and administrative costs in line with the industry.

"These initiatives have identified further significant opportunities for increased margins and enhanced returns in the confectionary business," said the company, which makes candy and chewing gum under the Cadbury, Trident, Halls and Dentyne brands.

Cadbury said it's going to have to make "incremental investment" to improve its margins in emerging markets and reconfigure its supply chain.

The company didn't give much credit to Peltz, saying it met with most of its shareholders after its earnings news in late February.

But it did acknowledge that the stake buy made it "appropriate" to move up the announcement.

"We met with most of our major shareowners representing around 40% of our shares. These shareowners were positive about our transformation of the company, supportive of our plans for enhanced growth and returns, and interested in our views on separation," the company said.

CEO Stitz said he won't comment on the dialogue he's had with Peltz.

Peltz's Trian was full of praise for Cadbury's chief.

"Under Todd Stitzer's leadership, the company has successfully built two strong businesses with the size and scale to thrive independently. Upon completion of a separation, we believe that both businesses will be better positioned to take full advantage of their world-class brands for the benefit of shareholders," the fund said in a statement.

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From the March 26, 2007, Prepared Foods e-Flash