London: Britain’s Cadbury Schweppes Plc rejected a private equity bid for its North American soft drinks unit due to the financing of the offer rather than the overall valuation, industry sources said on Friday.
A private equity consortium including Blackstone Group LP, Kohlberg Kravis Roberts & Co. and Lion Capital offered Cadbury 6.4 billion to 6.9 billion pounds ($13-14 billion), but wanted Cadbury to be involved in part of the financing of the deal, the sources added.
“The value could have been towards the top of this range, but Cadbury declined more due to the financing rather than the value of the bid,” one industry source said.
The world’s largest confectionery group said in March it would separate off its Dr Pepper and 7UP unit, and a sale to private equity buyers seemed most likely, until turbulence in the debt markets forced the auction to be delayed in late July.
Analysts said Cadbury was likely to opt to demerge the drinks business rather than sell or float it after problems in the debt market made private equity bids more difficult to finance for a business which they say is still worth up to 7 billion pounds.
Cadbury, the maker of Dairy Milk and Trident gum, is still committed to separating the drinks business and already reports it as a discontinued business, but it is assessing whether an outright sale, demerger or initial public offering (IPO) will prove the best method.
Cadbury shares were off 0.8% at 583 pence by 0805 GMT in a lower London stock market.