London – Cadbury Schweppes PLC said Tuesday it plans to close 15 percent of its candy factories by 2011, cutting about 7,500 jobs, and will likely sell the U.S. unit that makes 7-Up, Dr Pepper and Snapple soft drinks.
The company had announced in March that it planned to separate its drinks and candy businesses – under pressure from investors led by U.S. billionaire Nelson Peltz – but had not indicated whether it would sell the beverage business or spin it off to shareholders.
While the company said Tuesday that it was still pursuing “a twin-track process,” it appeared that the beverage business would be sold.
“The sale process is actively underway, and following expressions of interest, we now believe that a sale is the more likely outcome,” the company said.
A sale would be expected to yield 7 billion pounds to 8 billion pounds ($14 billion to $16 billion), said Jeremy Batstone-Carr, analyst at Charles Stanley in London.
Cadbury, which employs about 50,000 people in its candy and gum business, has 35 confectionery sites across Europe, the Middle East and Asia, and 59 other bottling and manufacturing sites worldwide.
“It’s a very cash-generative business. All that Cadbury said was they’re running a dual-track process,” said Charlie Mills, analyst at Credit Suisse in London, when asked to speculate on would-be suitors. He said the notion that venture capitalists might jump into the process made sense.
