UK/US: Cadbury Schweppes outlines DPSG demerger plan

Cadbury Schweppes has confirmed a timescale for the proposed demerger of its US soft drinks business.

The UK-based company said today (11 March) that the demerger of Dr Pepper Snapple Group, as the new unit will be known, should complete by May. The deadline comes despite speculation yesterday that Cadbury Schweppes may have to delay the move in light of the tough global economic situation.

A general meeting on 11 April will look to gain shareholder approval for the demerger, which would subsequently go through on 7 May, when DPSG shares would begin their listing on the New York Stock Exchange.

DPSG Inc. is forecast to have net debt of approximately US$3.8bn, representing a multiple of net debt to 2007 EBITDA of around 3.1 times. DPSG will not initially pay a dividend, Cadbury Schweppes noted.

In exchange for their existing Cadbury Schweppes ordinary shares, shareholders will receive ordinary shares in Cadbury plc, which will be listed on the London Stock Exchange, and shares of common stock in DPSG, which will be listed in New York.

Earlier this week, a report from banking group Bear Stearns had suggested that the demerger may face a delay. "Following a further deterioration in the debt markets, we believe there is now at least a 50/50 risk that Cadbury Schweppes might postpone the separation of its US beverages business," an analyst at the company wrote.