Cadbury Schweppes plc (NYSE: CSG; “CS”) on Friday, announced its intention to acquire the outstanding 45% minority in its South African subsidiary, Cadbury Schweppes (South Africa) Limited (“CSSA”), for ZAR1,581 million (143 million pounds sterling), via a Scheme of Arrangement (“the Scheme”).
Prior to the Scheme becoming operative, CSSA will distribute its shareholding in Amalgamated Beverage Industries Limited (“ABI”) to all CSSA shareholders, including CS, pro-rata to their holdings in CSSA. The implementation of this unbundling is a pre-condition to the Scheme. CS has agreed to sell its pro-rata holding in ABI to South African Breweries plc which will lead to a cash inflow to CS of ZAR496 million (45 million pounds). The disposal will be earnings enhancing for CS. The consolidated net cash impact of the transactions will therefore be a cash outflow of ZAR1,085 million (98 million pounds).
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CS intends to offer ZAR9.25 in cash per CSSA share, valuing the minority at ZAR1,581 million and the whole of CSSA at ZAR3,541 million (321 million pounds). This offer, together with the unbundling, represents a premium of 25.7% to the closing market price of CSSA on Thursday 19 October. CS has received an irrevocable undertaking to accept the offer from Tempora Investments Limited, which represents 44.6% of the minority shareholding in CSSA.
The transactions, which are expected to conclude by 22 December 2000, will give CS 100% ownership of its confectionery and foods businesses in South Africa and will complete the restructuring of CS’ business portfolio in South Africa following the disposal of its carbonated soft drinks business to Coca-Cola in 1999.
CSSA is a leading South African food group that is a market leader in the chocolate confectionery and concentrated beverage markets. Its products are marketed under a number of well-known brands including Cadbury, Chappies, Oros and Energade.
During the year ended 31 December 1999, under South African GAAP, CSSA made profit before tax and exceptional items of ZAR238 million (22 million pounds) on turnover of ZAR1,746 million (158 million pounds).
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By GlobalData“These transactions are consistent with our aim of owning 100% of our key operating businesses. They will also provide opportunities for value creation through closer integration of our South African business within the Group,” said John Sunderland, CEO of CS.
