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March 14, 2007

UK: Peltz investment boosts Cadbury shares

News that activist investor Nelson Peltz has amassed a stake in Cadbury Schweppes has sent shares rocketing, prompting speculation that the group could come under pressure to divide its beverage and confectionery businesses.

News that activist investor Nelson Peltz has amassed a stake in Cadbury Schweppes has sent shares rocketing, prompting speculation that the group could come under pressure to divide its beverage and confectionery businesses.

 

More than GBP1.2bn (US$2.32bn) was added to the company’s market valuation, which increased to GBP12.63bn as shares rose from an opening value of 546 pence to close at 602 pence yesterday (13 March). Share value stabilised in morning trade today, dropping just 0.5%, to 599 pence at time of press.

 

Peltz, who has a reputation as an activist investor and recently won a seat on the Heinz board, took control of 2.98% of the Dairy Milk and Trident manufacturer, Cadbury said in a statement. This makes him Cadbury’s fourth-largest shareholder.

 

Speculation has followed that Peltz will try to force a break-up of the company, separating its confectionery and drinks businesses to unlock value for shareholders. There has also been renewed takeover talk, with possible bidders seen as the US’s Hershey or Kraft.

 

The move follows a tough year for Cadbury when it faced a large-scale recall of products contaminated with salmonella and an accounting scandal in its Nigerian business. Last month the group reported a 12% drop in profits.

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