Restructuring / Turnaround Strategies Case Study

Corporate Restructuring at Cadbury Schweppes: Splitting US Beverages and Confectionery

Abstract:

In March, 2007 Cadbury Schweppes, the largest confectionary business in the world announced its decision to split its US beverages business, which owned famous brands such as Dr Pepper and Canada Dry, from the rest of the Cadbury Schweppes. The company had been under increasing pressure to split its business. The move, many analysts believed had come under a strong push from the Nelson Peltz, a US activist investor, who in March 2007 acquired almost 3% of the company’s share. Further the company acknowledging the strong portfolio of brands for its confectionary business intended to revert to its origins as a core confectionary company in the global market.

Although the strategic rationale was still misty, the split certainly would make the de-merged independent Cadbury Schweppes US beverages, an approximate £ 7.0 billion division, the third largest contender in the US soft drinks market after Coca-Cola and PepsiCo. The twin-track approach had a strong reaction from the credit rating agencies as it apparently expressed its intentions to downgrade Cadbury Schweppes ratings. The case ends on a debate whether the decision to split beverage business would prove a right one for Cadbury.

Pedagogical Objectives:

• Understanding Corporate Restructuring Strategies
• Discuss the Splitting off as a way of restructuring.

Keywords : Cadbury Schweppes; Corporate Restructuring; Business Portfolio Management; Strategic Business Units; Business Acquisitions and Disposals; Business Strategy; Inorganic Growth; Organic Growth; Spin-off Strategy; Core Business; Brand; Revival; Non-core Brands; Competitive Advantage; Global advantaged markets; Restructuring / Turnaround Strategies Case Study; Global Confectionery Industry; Global Beverage Industry; US Beverages Industry; Coca Cola; Pepsi; Nestle; Chocolate; Candy; Gum Markets; Carbonated Soft Drinks