Cadbury Schweppes Cutting 7,500 Jobs

Company plans to close 15 percent of its confectionary factories by 2011 and will likely sell the U.S. unit that makes 7-Up, Dr Pepper and Snapple.

LONDON (AP) - Cadbury Schweppes PLC said Tuesday it plans to close 15 percent of its confectionary factories by 2011, cutting about 7,500 jobs, and will likely sell the U.S. unit that makes 7-Up, Dr Pepper and Snapple as it focuses on its candy and gum businesses.
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 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 $14 billion to $16 billion, said Jeremy Batstone-Carr, analyst at Charles Stanley in London.
Cadbury, which employs about 50,000 people in its confectionery 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.
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.
Unite, the union which represents 2,000 Cadbury Schweppes workers in Britain, said the announcement was worrying.
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