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Last Updated: Wednesday, 1 August 2007, 10:51 GMT 11:51 UK
Cadbury's to go ahead with split
Drinks dispenser
Cadbury's is to separate its drinks business, whatever happens
Cadbury Schweppes has said that its plans to hive off its US drinks business will not be derailed - even if a buyer cannot be found.

Last week the firm extended the deadline for offers for the division - home of 7Up and Dr Pepper - because of turbulence in the debt market.

But it has said it will demerge the business if it cannot sell it.

The comments came as it announced profits fell 6% to 180m in the first half of 2007 at its confectionary arm.

Sales grew by 6% to 2.3bn, but extra costs - including the marketing of the launch of its Trident chewing gum - hit the bottom line.

Cadbury's also suffered the impact of a 1m fine last month after admitting to food safety offences, because some of its products had tested positive for salmonella.

It said that its share of the confectionary market was likely to be hit in the second half of the year, after its factory in Sheffield was hit by flooding.

Wary lenders

Analysts believe that the beverage business may be worth up to 7bn as a separate entity, while the chocolate and chewing gum operations could be worth as much as 9bn.

This compares favourably with Cadbury Schweppes's current market value of about 12.5bn. "Should debt markets not stabilise sufficiently, we are now fully prepared to pursue a demerger process", the firm said.

Last week, the company said that it hoped the extension of the deadline for bidders would allow suitors "to complete their proposals against a more stable debt financing market".

Speculation about bids for companies made by private equity firms has been the driving force behind recent gains on global stock markets.

Private equity buyouts involve borrowing large amounts of money - and there are signs that banks are becoming wary about lending the necessary cash.

The perception that there might now be less merger activity is one of the factors behind the latest stock market falls, as investors rush to sell off shares.

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