UK: Cadbury confirms Euro drinks sell-off

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After months of speculation, the board of Cadbury Schweppes has confirmed its intention to sell its Europe Beverages business. The company said that it expects to commence the sale process in the "near future".

In a statement the UK-based drinks and confectionary group said: "Following a strategic review of Europe Beverages, the board has decided to focus the group's financial and management resources on its confectionery and other beverage businesses which have greater potential for higher growth and returns. Proceeds from the sale will initially be used to reduce the Group's net debt which at June 2005 was GBP4.3 billion." 

Todd Stitzer, CEO of Cadbury Schweppes said: "Europe Beverages has a great portfolio of brands, a talented management team and strong routes to market. I'm proud of the commitment and dedication of its workforce.  However, the potential for growth and value creation is greater in the Group's other operations, and therefore we believe it is in the best interests of our shareowners to investigate a sale of the business."

The US private-equity firm Carlyle Group is thought to be the leading contender to buy the division at present, although another equity group KKR is also rumoured to be interested.

Carlyle is though to have lined up Nish Kankiwala, formerly of Pepsico Inc, to lead its bid.

Estimates suggest a sale of the European unit will fetch GBP1BN.

In 2004, the Europe Beverages division's revenue was £653m and underlying profit from operations was £116m, representing 10% and 11% of the group's revenue and underlying profit from operations respectively. Its sales volume of 1.7 billion litres makes it the third largest player in the European carbonated soft drinks market.

Europe Beverages' principal products are carbonated soft drinks, mineral waters and still drinks.  Its main brands are Schweppes, Orangina, TriNa, Oasis and La Casera which account for around 75% of sales. Other brands include Apollinaris, Pampryl, Gini and Vida.  Products are sold across Continental Europe, with some sales in the UK, parts of North and West Africa and the Middle East.  Sales are concentrated in three countries, France, Spain and Germany, which account for around 85% of total sales.

Sectors: Soft drinks

Companies: Cadbury

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