Cadbury accepts $2.19 billion offer for soft-drinks unit

Monday, November 21st 2005, 10:12 am

By: News On 6

LONDON (Dow Jones/AP) _ Cadbury Schweppes PLC said Monday it agreed to sell its European soft-drinks arm for 1.85 billion euros, or $2.19 billion, to a consortium comprising private-equity firms Blackstone Group and Lion Capital.

Cadbury Schweppes said the proceeds from the offer will be used to pay down debt, adding it will now concentrate on its confectionery and other beverages businesses.

Richard Workman, an analyst at Oriel Securities said the deal was at a ``decent price'', and noted the sale auction had produced a quick resolution.

At 1210 GMT, Cadbury shares were down 0.3 percent or 2 pence lower at 565.5 pence, in a slightly softer market where the FTSE 100 Index was down 5 points.

Cadbury said that once it has discussed the deal with employee representatives, it will be able to accept the binding offer.

If Cadbury doesn't accept it, under the deal's terms the group will have to pay a termination fee of 5 percent of the offer value, and keep the European soft-drink business for 12 months.

Workman at Oriel said the sale will dilute earnings by around 6 percent, but leave Cadbury as a stronger business. Cadbury is getting rid of a business which hasn't been particularly exciting for a while.

Cadbury's European drinks unit has been hit by a downturn in consumer spending in the region, and last year was hit by a cold and wet summer, which meant people bought fewer soft drinks. Cadbury in July said the unit's first-half, like-for-like sales fell, with France being particularly difficult.

London-based Lion Capital has a drinks-industry heavyweight, director Javier Ferran, to boost the unit. He has held several key senior positions during his 20-year career at the drinks company, Bacardi Group. He was president and chief executive of Bacardi Limited from 2003 to 2004.