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Last Updated: Monday, 18 June 2007, 16:14 GMT 17:14 UK
Cadbury plans fuel job concerns
Cadbury's chocolate bar
Cadbury's says separating its businesses is key to future growth
Confectionery and drinks giant Cadbury Schweppes is to set out plans for a major overhaul of its business amid speculation of substantial job cuts.

It is to give details on Tuesday about plans to separate its chocolate and gum business from its US drinks operation, whose brands include Dr Pepper.

Options include the sale of the drinks business or its separate flotation.

Reports have also claimed Cadbury may lose up to 5,000 jobs in a cost-cutting move but it has not commented on this.

US focus

The world's largest confectionary business, Cadbury employs 50,000 staff worldwide including 2,500 workers at its UK chocolate factory in Bournville near Birmingham.

The firm has been under pressure since poor European sales and a costly salmonella scare in the UK - which led to a million chocolate bars being recalled - saw profits fall sharply last year.

Dairy Milk, Cream Eggs, Green and Black's, Trident Gum, Dr Pepper, 7-Up, Snapple

It has been evaluating its strategic options since March while stressing that a separation of the two businesses would better exploit their potential and increase returns to shareholders.

Analysts believe the US drinks business could be a takeover target with a number of private equity firms and Nelson Peltz, who sold the Snapple drinks business to Cadbury in 2000, seen as possible buyers.

Mr Peltz bought a 3% stake in Cadbury earlier this year, sending its shares up sharply.


Cadbury has reshaped its business in recent years, exiting less profitable sectors and focusing instead on core brands, particularly in the US and emerging markets.

It sold its European soft drinks arm in 2004 and has bought businesses such as the Green and Black's chocolate firm designed to appeal to wealthier consumers.

Worker oversees production line at Cadbury's Bournville factory
Cadbury's Bournville factory is one of the most famous in the UK

But despite successes in North America and Asia, overall growth has remained sluggish.

Unions are concerned by media reports that the firm may be set to embark on a cost-cutting drive similar to that pursued in 1999, when 30 factories were shut.

Cadbury currently operates 35 confectionary sites around the world as well as 59 bottling and manufacturing plants.

Unions said the firm must be open about its plans with staff and not blindly in thrall to calls for improved performance from the City.

"This seems to have been done after activist investors have panicked the management into cutting jobs," Gary Smith, from the GMB union, said of reports of job cuts.

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