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Cadbury on its own

May 2, 2008
By Canadian Vending



Cadbury on its own
Cadbury PLC made its debut as an independent confectionery
company on Friday after spinning off its U.S. drinks arm.

May 2, 2008, Cadbury PLC made its debut as an independent confectionery company on Friday after spinning off its U.S. drinks arm.

The company, trading under the symbol CBRY on the London Stock Exchange, opened lower than expected but later rose on speculation about further consolidation in the candy industry.


The maker of Dairy Milk chocolate, Trident gum and Hall cough drops began trading at 622 pence (US$12.35), below the anticipated 640 pence ($12.71), before rising to 634 pence ($12.59) in afternoon trade.

That gives the group, which is half of the former Cadbury Schweppes PLC, a market capitalization of just under eight billion pounds ($16 billion), enough to ensure that it stays in the FTSE 100 index of leading shares.

The other half of Cadbury Schweppes, the North American beverage business to be called Dr Pepper Snapple Group Inc., will begin trading on the New York Stock Exchange on Wednesday.

“The separation of beverages allows us to take the company back to the future,'' said Cadbury's chief executive, Todd Stitzer. “The past few years have seen a transformation of the group's performance, and as a focused confectionery company we will be able to do better still.''

The listing comes as Cadbury is set to be overtaken as the world's largest confectionary business by Mars Inc. The U.S. candy maker earlier this week announced a $23 billion takeover of Wrigley Jr. Co., bringing together brands including Snickers, M&Ms, Juicy Fruit, Orbit, Extra and Big Red.

Cadbury currently has 10.1 per cent of the market. The combined Mars-Wrigley would have 14.1 per cent.

Analysts have speculated that Cadbury will seek a deal with The Hershey Co. A matchup between the pair would be mutually beneficial _ Cadbury lacks Hershey's U.S. presence, while Hershey lacks Cadbury's global reach.

If that fails, Cadbury could be a takeover target itself with Kraft Foods Inc. named as a likely suitor.

Landsbanki upgraded Cadbury to buy from reduce.

“Cadbury is now a pure-play confectionery business with substantial exposure to fast-growing emerging markets and wellness categories,'' the brokerage said, putting a 750 pence ($14.84) target price on the company.

Standalone Cadbury has revenues of more than five billion pounds ($9.8 billion).

Cadbury aims to deliver sales growth of four per cent to six per cent a year and to see profit margins in the mid-teens by 2011, under a plan which calls for cutting 7,800 jobs and closing 15 per cent of its factories worldwide.

Cadbury won approval from shareholders for the split into two units last month after facing pressure from investors led by U.S. billionaire Nelson Peltz. Its initial plan to sell the beverage unit was foiled by turmoil in the global credit markets.


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