Cadbury Shareholders OK Beverage Spinoff

The business, to be called Dr Pepper Snapple Group Inc., will be listed separately on May 7 on the New York Stock Exchange after a 99.75 percent vote in favor of the plan. Cadbury Schweppes shareholders will get shares in DPSG. The remaining company will be known as Cadbury PLC and make confections such as Dairy Milk chocolate and Trident chewing gum.

Cadbury had faced pressure from investors led by U.S. billionaire Nelson Peltz to separate its beverage and candy businesses. Its initial plan to sell the beverage unit was foiled by turmoil in the global credit markets.

The vote in favor of the spinoff came after Cadbury disclosed a 3 percent rise in revenue at DPSG in the first three months of the year, compared to a 7 percent rise in confectionary sales. Stripping out the effect of acquisitions, DPSG's growth rate was just 1 percent.

"While the overall delivery is respectable, we have to confess that overall this is not quite as strong a start to the year as we had anticipated," Citigroup analysts said in a research note.

Cadbury Chief Executive Todd Stitzer said that the beverage unit had been hit by a number of one-time factors in the quarter such as the loss of some distribution rights and the timing of concentrate price rises. Combined, these effects reduced revenue by four percentage points, he said.

The division's share of the U.S. carbonated drinks market also fell for the first time in four years, which Finance Director Ken Hanna attributed to price rises needed to offset the rising costs of aluminum, oil and high-fructose corn syrup.

While DPSG raised prices by 4 percent in the quarter to meet those costs, Coca-Cola Co. and PepsiCo Inc.'s Pepsi division only raised prices by 2 percent, Hanna said. Coca-Cola and Pepsi are the two biggest soft drink makers in the United States.

Stitzer said the first quarter is the least important quarter for the beverage business, adding that he is confident it will come back strongly in the summer.

In its sales update, Cadbury said an early Easter and strong price competition had hit sales of its chocolate eggs, leading to slower growth of 3 percent in its domestic market.