Cadbury Schweppes has denied reports that it has chosen to demerge its US drinks business as opposed to selling it outright.


Cadbury, the world’s largest confectioner, announced in March that it was looking to separate the beverages arm – which makes Dr. Pepper and Snapple – from its core confectionery business.


The UK-based firm had favoured a sale but had pushed back the timetable for a sale due to volatility in global credit markets.


UK newspaper The Times said today (15 August) that Cadbury now favoured a demerger of the unit, having concluded that private equity would struggle to raise the required funds.


The report said senior executives at Cadbury met last week and told bankers to prepare a demerger of the drinks unit before the end of August.


However, a spokesperson for Cadbury denied that any decision had been taken. “We selected a dual-track approach in March,” the spokesperson said. “We will continue to do so.” The spokesperson did not give a timescale for when a decision would be taken, however.


The separation of the two businesses is a precursor to Cadbury’s strategy of reshaping and reviving its confectionery business and industry watchers had expressed concern that a de-merger would hamper the company’s revamp.


Earlier this month, Cadbury CFO Ken Hanna insisted the company’s programme would go-ahead as planned, whether the drinks arm was sold or de-merged.


“If we sell, we’ve said we will give the money back to shareholders. Shareholders will get a special dividend or cash. If we demerge the business, they will get shares in an Americas Beverages company that they can sell if they want to,” Hanna said. “It doesn’t affect the flexibility of Cadbury or our strategy at all.”