Cadbury Schweppes has signed a credit agreement alongside a consortium of five banks, marking the start of its planned demerger.
The banks – JP Morgan Chase, Bank of America, Goldman Sachs, Morgan Stanley and UBS – have agreed to grant the company £1.9 billion of debt financing to reassure investors and allow the two separate groups to maintain an investment grade credit rating.
The group is to separate into two – the confectionery business to be named Cadbury, and the beverage business to be known as Dr Pepper Snapple Group (DPSG).
After the demerger, Cadbury is expected to hold a net debt of approximately £1.65 billion, while DPSG would have around £1.9 billion ($3.8 billion).
The demerger is expected to come into effect in early May, in line with the company’s original plans.
Cadbury is to set targets for both of the demerged companies, which will include revenue increases of 4 to 6 per cent for Cadbury and 3 to 5 per cent for DPSG over the ensuing few years.