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Cadbury's Big Day

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  • Cadbury's Big Day

    June 19th is the day that Cadbury will make headlines for the demerger or sell off.

    Opinions anyone????
    Something or nothing???

  • #2
    From what I've read

    There are two different groups of private equity firms that want to buy CSAB. One of the two groups is working with Cott Beverages. If the group working with Cott wins, then the CSAB would be combined with Cott to form a new company. If the other group wins, then CSAB will probably remain largely intact as a new company. In the Cott combination deal, several of the CSAB lesser-known drinks would probably be sold off to other companies.

    It will be interesting to see what happens.


    • #3
      Not much today

      Well, this is the article that showed up on my local newspaper's website today.

      I guess the "big day" is still a few days off.

      Cadbury to Cut About 7,500 Jobs

      By ROBERT BARR Tuesday, June 19, 2007

      LONDON - Cadbury Schweppes PLC said Tuesday it plans to close 15 percent of its candy factories by 2011, cutting about 7,500 jobs, and will likely sell the U.S. unit that makes 7-Up, Dr Pepper and Snapple soft drinks.

      The company had announced in March that it planned to separate its drinks and candy businesses _ under pressure from investors led by U.S. billionaire Nelson Peltz _ but had not indicated whether it would sell the beverage business or spin it off to shareholders.

      While the company said Tuesday that it was still pursuing "a twin track process," it appeared that the beverage business would be sold.

      "The sale process is actively under way, and following expressions of interest, we now believe that a sale is the more likely outcome," the company said.

      A sale would be expected to yield 7 billion pounds to 8 billion pounds ($14 billion to $16 billion), said Jeremy Batstone-Carr, analyst at Charles Stanley in London.

      Cadbury, which employs about 50,000 people in its candy and gum business, has 35 confectionery sites across Europe, the Middle East and Asia, and 59 other bottling and manufacturing sites worldwide.

      Friday was the deadline for expressions of interest. Private equity groups and the Canadian bottler Cott Corp., which makes private-label soft drinks for retailers like Wal-Mart Stores Inc., are thought to be among the possible bidders.

      Calls to Peltz's Triarc Companies Inc. in New York weren't immediately returned Tuesday.

      "It's a very cash-generative business. All that Cadbury said was they're running a dual-track process," said Charlie Mills, analyst at Credit Suisse in London, when asked to speculate on would-be suitors. He said the notion that venture capitalists might jump into the process made sense.

      Jonathan Feeney, an analyst with Wachovia Capital Markets, said the announcement was better than expected.

      While disappointed that the company didn't have a completed deal to announce for the U.S. business, he said in a research note that the company's comments that a transaction is imminent means the operations will likely fetch something in line with numbers that have recently been mentioned, roughly $15.8 billion.

      Cadbury Schweppes shares fell 0.9 percent to 700 pence ($13.87) on Tuesday in London.

      "The absence of a definitive buyer for the U.S. beverages business and timetable for disposal and return of proceeds to shareholders" could be tempering the share reaction, Batstone-Carr said.

      Cadbury, which also has products such as Dairy Milk chocolate and Trident Gum, had been under increasing pressure to revert to its origins as a confectionery company by spinning off the U.S. drinks business, particularly since it sold its European soft drink unit in 2005.

      Its March announcement came just days after the company revealed that Peltz's investment vehicle Trian Fund Management had taken an almost 3 percent stake. Peltz has a record as a shareholder activist, buying up stock in companies he sees as undervalued, then agitating for change. He took a 5.5 percent stake in ketchup maker H.J. Heinz Co. last year and subsequently won a seat on the company board after a bitter proxy battle.

      Cadbury Schweppes said Tuesday that after the sale of the beverage business, it would be renamed Cadbury PLC and would aim to raise margins to the mid-teens by 2011, compared with 10 percent last year.

      Restructuring will result in a charge of 450 million pounds ($890 million), and the company said it plans capital investments of about 200 million pounds ($396 million) over the next three years.

      "Our cost reduction initiatives will impact all parts of the group, in sales, general and administration costs and supply chain, in the regions and at the group center," the company said.

      Unite, the union which represents 2,000 Cadbury Schweppes workers in Britain, said the announcement was worrisome.

      "We have worked hard with Cadbury in recent years and cooperated in a change program which means the U.K. factories are extremely efficient," said union official Brian Revell. "We are, therefore, concerned by today's announcement, which we are convinced is driven by the threat of a takeover by private equity."

      The company also announced confectionary revenue in the first quarter rose 9 percent, led by a 15 percent gain in the United States and Latin America.
      Give me some cane sugar real Pepsi in a glass bottle... and not Throwback!


      • #4
        I was wrong

        Actually, there are three groups trying to buy the CS beverage business: one group of mostly American private investors, one group of mostly British private investors, and a group of private investors that is working with the Canadian Cott Beverage Corporation.

        The fact that they still have not made up their mind on who to sell the business to is interesting. Based on what I've read, the group led by Cott did not seem to have as much money as the other two groups.

        Also, the group of British investors has some of the same folks who bought the CS European beverage business a while back.


        • #5

          It sounds like the bids they received were not as high as they'd expected:

          Cadbury Schweppes "hold," target price raised |


          • #6
            Demerger it is.


            Cadbury Schweppes demerges: Financial News - Yahoo! Finance


            • #7
              With a spin-off, the chance of various brands (such as Snapple, which Coca Cola wanted) being sold off individually is greatly reduced.


              • #8
                But if the company is looking to further cut costs and consolidate its' portfolio, they may consider selling marginal or regional brands.

                Especially since they also own a big chunk of their own bottling and distribution operations, which are cash-intensive.

                Maybe they will push more company owned brands through the bottler distribution system, like they do with Hawaiian Punch.

                They should also focus on trying to bring distribution of their brands into their own network, like Dr Pepper, Canada Dry, 7Up, etc. I also wonder if they could raise some cash by selling off Schweppes Ginger Ale to Pepsi?


                • #9
                  I have a question... RC Cola is now property of Cott worldwide of is property of Cadbury Schweppes...

                  Also I have another one, this demerge would affect the worldwide distribution of Dr. Pepper? (including Mexico)


                  • #10
                    If I am not mistaken CS only owns dr pepper in the US, coke owns it in the rest of the world. I may be wrong but if memory serves me, pepsi owns 7up worldwide outside of the US as well. RC may be owned worldwide by cott but inside the US it is a cs brand.

                    as far as pepsi buying schweppes, I am only a peon but I hope that they will not, that would mean that we would once again be forced to carry 1 liters and those horrible 8 oz bottles only to sit and wait for them to go out of date to pick them up. The new boss came to town (who is from TX, all of the previous have come from up north where evidently people drink alot of gingerale etc) asked why we had so much date issues on the same 6 items (ale,club , tonic in both sizes) when we all told him, within a month we had dropped them all. Here we have canada dry but only ale in 2 liter and 12 pk. We do not sell alot but we do sell enough that there isn't any date issues.
                    Last edited by the saint; 10-13-2007, 07:39 AM.
                    If what you did yesterday still looks big, you haven't done much today.


                    • #11
                      You're right fusion

                      They may want to get rid of regional favorites and settle on one unified lineup throughout the U.S.


                      • #12
                        Originally posted by Ram0n C0keah0lic View Post
                        I have a question... RC Cola is now property of Cott worldwide of is property of Cadbury Schweppes...
                        RC Cola belongs to C-S in the USA, Mexico, and Canada, and to Cott, which does business as "RC International" everywhere else. Nothing about the demerger changes this. Cott owns RC where it owns it, and C-S owns RC where it owns it.

                        Also I have another one, this demerge would affect the worldwide distribution of Dr. Pepper? (including Mexico)
                        Dr Pepper belongs to C-S in the following countries: USA, Mexico, Germany, France, Italy, Sweden, The Netherlands, Slovakia, Finland, Austria, Czech Republic, Belgium, and Norway. In Canada and Poland while it technicaly also belongs to C-S, Pepsi has a perpetual distribution contract. In the rest of the world, it belongs to Coca-Cola. The demurge in no way affects that. Coca-Cola own Dr Pepper where it owns it, and C-S owns Dr Pepper where it owns it.

                        Likewise the Schweppes brand belongs to local owners, not C-S, in Brazil, Hong Kong, Mexico, Ireland, New Zealand, and Romania.

                        This is, IMHO, the problem with C-S as a company. A confusing hodgepodge of brand names that it controls in this country, but not that. Both on the soda side, compounded by the fact that the distribution is likewise complex (Dr Pepper might be sold by a Coke bottler in one town, Pepsi in another, C-S in house in another, with a completely different arangement for Canada Dry and another for RC) such that it is impossible to understand; and on the candy side, where Hershey, and not C-S, owns most, but not all Cadbury brands in the USA, and Cadbury owns the rest of the world.


                        • #13

                          Originally posted by SamC View Post
                          RC Cola belongs to C-S in the USA, Mexico, and Canada, and to Cott, which does business as "RC International" everywhere else.
                          I wonder if the demerged C-S American Beverage company would look to merge with Cott? If such a consolidation were to take place, the new company would have worldwide rights to the Royal Crown line of soft drinks (in addition to all of the current C-S convoluted rights to this here, and that there).


                          • #14
                            Great answers! thanks guys!

                            But I have to give some updates... RC Cola it's true, it was property of C-S here, but it was discontinued here a few years ago, it was on sale in cities like Leon and Guadalajara, but not anymore, in fact RC doesn't appear anymore at the C-S mexican website: Cadbury Schweppes Caribe & Latinoam??©rica Bebidas , while Cott has its own cola brand here: Stars & Stripes. website: Cott Embotelladores de Mexico, S.A. de C.V.

                            Another one, the Schweppes brand is property (and bottled) by C-S, but some C-S brands like Canada Dry and Squirt are bottled by other companies: Canada Dry is bottled by PBG Mexico in some areas and Squirt is bottled by PBG Mexico in some areas and Consorcio AGA in other areas.
                            Last edited by Ram0n C0keah0lic; 10-14-2007, 04:59 PM.