One of the first victims of the credit turmoil, Cadbury Schweppes said back at the very beginning of August that plans for a £7bn sale of its US beverages business were looking shaky. The hope was that a speedy recovery in credit markets would allow bidders to put together their proposals against a more stable backdrop.
“No – would you please just get on with it,” was the broad response from analysts. After missing the chance to get shot of the division last year, and instead being spurred into action by activist investor Nelson Peltz, the expected proceeds from a disposal had in any case fallen, they pointed out. Protracted uncertainty was the last thing the company, and its shares, needed.
Hence the early bump for the company’s stock on Wednesday as it said that instead of selling the American arm it would pursue a demerger. After rising 1.9 per cent at the open, the shares came back slightly to trade up 5.5p or 0.9 per cent.
Investors will receive shares in the business, which will be listed on the New York Stock Exchange, probably in the second quarter of 2008.
The value, reiterated Todd Stitzer, chief executive, is the same – and to sweeten the blow he added that there could still be some surplus cash on its way to shareholders, presumably in the form of a special dividend.
More of a surprise was the departure of Gil Cassagne, head of the business in question, leaving with a double euphemism – “for personal reasons to pursue other interest.” Larry Young, current boss of the bottling operation, takes over with a beverages pedigree that shouldn’t prompt too much chagrin.
The odd cynic though on Wednesday was heard to wonder that in plumping for certainty and a “different process that takes a bit longer”, Cadbury had still left its options open. The second quarter leaves a little more time for the debt markets to come back and a private equity buyer to arrive proferring the right price.