UK: Cadbury Schweppes to cut jobs, split business
Cadbury Schweppes has revealed plans to close 15% of its manufacturing sites by 2011 in an effort to reduce costs and also confirmed suspicions that it will now sell off its US drinks business.
Cadbury, which employs 50,000 people globally, said today (19 June), that 7,500 jobs would go as part of the company's cost reduction plans and that it will probably split the company in two as part of the process.
The changes should increase Cadbury's profit margins over the next four years, despite initial reorganisation costs of around GBP450m (US$892.7m).
Cadbury chief executive Todd Stitzer said: "The plans announced today represent the next step in transforming our confectionery company from being the biggest global confectionery company to being the biggest and the best."
The Transport & General Workers' Union, representing over 2,000 of Cadbury's UK staff, added: "We have worked hard with Cadbury in recent years and co-operated in a change programme which means the UK factories are extremely efficient. We are, therefore, concerned by today's announcement which we are convinced is driven by the threat of a takeover by private equity."
Citing unnamed sources last week, The Times has claimed that two private equity consortiums are in the running for Cadbury's drinks unit. One consortium is comprised of Blackstone, Kohlberg Kravis Roberts, and Lion Capital, while another consists of Bain Capital, Texas Pacific, and Thomas H Lee. A third possible group, made up of Canada's Cott Corp. and other private equity groups, is also thought to be looking to bid.
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