KEY POINTS:
Britain's Cadbury Schweppes says it is extending the timetable for the sale of its North American drinks business because of the turbulence in debt markets, although it says buying interest is keen.
Industry sources said at the weekend the auction might be delayed for weeks but they still expected the business to fetch £7-7.5 billion ($14.4-15.4 billion), with a private equity consortium the most likely buyer.
The problems in the debt markets have made it more difficult for private equity groups to borrow from banks, causing problems with the highly leveraged buyouts of Boots in Britain and Chrysler in the United States - and the turmoil spilled over into equity markets on Friday causing sell-offs in London and New York.
Cadbury shares slumped 5 per cent to a low of 559.5 pence after Friday's news but steadied to be down just 0.9 per cent at 584p. The FTSE 100 index was off 0.1 per cent.
The stock fell 4.3 per cent on Friday, continuing a slide from a year high of 728p in late May largely reflecting concerns over the sale process.
"This is a sensible and expected move, but clearly it draws attention to the risk it may go for a demerger rather than a sale, meaning that Cadbury would not be getting cash," said analyst Rob Mann at brokers Collins Stewart.
Cadbury, the world's biggest confectionery group, said the sale process was ongoing, and that interest remained strong.
"However, the leveraged debt markets have experienced extreme volatility in recent days.
"As a result, a decision has been taken to extend the sale timetable to allow bidders to complete their proposals against a more stable debt financing market," the group said.
The auction for Cadbury's Dr Pepper, 7UP and Snapple North American drinks business boiled down to a two-horse race between three-party private equity consortiums, sources said.
Blackstone Group, teaming up with Kohlberg Kravis Roberts and Lion Capital, was thought to be the front runner, with a rival private equity grouping including Bain Capital Partners, Thomas H. Lee Partners and TPG also bidding, the sources added.
Originally, final bids for the drinks business had been due today.
Cadbury announces its half-year results on Wednesday.
Cadbury decided in March to separate its North American soft drinks business.
- REUTERS
