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Cadbury Schweppes should return as much as US$1.7 billion to shareholders after the spin-off of its US drinks business next year or face an attempted boardroom coup, a rebel investor has demanded.
The billionaire corporate raider, Nelson Peltz, who has been building a stake in the confectionery giant, put himself on a public collision course with Cadbury management, setting out a string of demands to bolster the company's share price.
In particular, he said attempts to boost the firm's profit margins did not go far enough. Cadbury said this year it would cut 7800 jobs and is fighting union resistance to factory closures in the UK, but Peltz demanded that Cadbury increases and brings forward its profitability targets.
In a letter to the Cadbury board, signed with his partners in the Trian fund management group, Peltz wrote: "If management and the board fail to make progress in the coming months on their initiatives and the plans we have outlined, Trian will look to become significantly more active in evaluating all of our alternatives as a large shareholder."
Peltz said he was making the letter public to "set the record straight" after having stayed silent for nine months. He began building a stake in Cadbury last December and, after teaming up with the Qatar Investment Authority, an arm of the emirate's government, now has 4.5 per cent of the company.
Trian is trying to force Cadbury to hire new board members with links to Peltz, the letter showed, but the confectioner is resisting. Peltz's threat to increase pressure on the company next year could include trying to force a shareholder vote on a management shake-up.
Cadbury, meanwhile, has concluded privately that Peltz's plans are unrealistic.
- Independent
