Cadbury to sell Europe drinks unit to Blackstone

Nov 21 | Updated: Nov 22 2005, 05:30am hrs
Cadbury Schweppes Plc, the maker of Dr Pepper soda and Trident gum, plans to sell its European soft- drink unit to Blackstone Group LP and Lion Capital LLP for 1.85 billion euros ($2.2 billion) to concentrate on beverages in the US and candy worldwide.

The offer for brands including Orangina is subject to talks with worker representatives and must be approved by European Union regulators, London-based Cadbury said today in a statement.

The business is expected to report sales of about 1 billion euros in 2005, the buyout firms said in a separate release. The sale will give Cadbury, the worlds third-biggest soft- drink maker, more money to spend on new drinks and advertising in the faster-growing US market to compete with Coca-Cola Co and PepsiCo Inc.

First-half sales at the European drinks business fell 1% as the US unit reported a 5% gain. We see this as a good move since Cadbury did not have the necessary size and strength in Western Europe, said Edouard Dubuis, who helps oversee assets worth about $31 billion at Clariden Bank in Zurich, including Cadbury shares. Cadbury stock fell 3 pence to 564.5 pence in London, valuing the company at 11.7 billion pounds ($20.1 billion).

Atlanta-based Coca-Cola has gained 1.3%, while shares of Purchase, New York-based PepsiCo have risen 12%.

Perrier-Jouet Blackstone, which is seeking $12.5 billion for the worlds biggest buyout fund, and London-based Lion Capital LLP, whose investments have included Branston pickle and Perrier-Jouet champagne, will be equal partners in the business, they said.