Cadbury Schweppes, the world's biggest confectioner, said the demerger of its $11 billion North American soft drinks business is set for May 7, easing concerns over a delay and sending its shares higher.
The British maker of Dairy Milk chocolate and Trident gum said on Tuesday it expected both Cadbury Plc and the demerged Dr Pepper Snapple Group Inc (DPSG) to have investment-grade capital structures as it signed definitive credit agreements for DPSG.
The loan deal for DPSG arranged with five banks helped dispel concerns that tight credit markets may have prevented the division being split off and paves the way for the drinks group to be listed on the New York Stock Exchange on May 7.
Cadbury shares were the top gainer in the FTSE 100 index, up 4.3 percent to 562-1/2 pence by 1015 GMT as the news settled investors' nerves that a worsening world credit crunch might jeopardise the beverage spin-off.
"The completion date should reassure investors that the demerger will proceed as Cadbury had planned in the second quarter of 2008," said one industry analyst. Last week, US brokers Bear Stearns heightened concern that weakening credit markets may cause the spin off to be delayed or abandoned if the Dr Pepper and 7UP soft drinks group was not able to take on more debt as a separate company.
Cadbury moved to sell the drinks unit last March under pressure from active investor Nelson Peltz, but plans for a lucrative sale to private equity buyers were detailed by a world credit squeeze in July and a spin-off was decided on by October.