British confectioner Cadbury PLC, the world's biggest candy maker, today said that it has reached a conditional agreement to sell its Australian drinks business to Asahi Breweries, Ltd. for £550 million ($808 million).
The agreement between Cadbury and Asahi is subject to a right of negotiation with Coca-Cola, which can negotiate a potential acquisition of Schweppes Australia until March 2009.
Cadbury said that if Coca-Cola made an offer on the business, it would "carefully consider such offer, including the price and likelihood of receiving necessary regulatory and other consents." If it does not reach an agreement with Coca-Cola, then Cadbury's agreement with Asahi will be binding.
The company had been considering the future of Schweppes Australia since May, when as the former Cadbury Schweppes it divested its US drinks operation. That business has since become Dr. Pepper Snapple Group Inc.
The decision to sell the Australian business was announced in a trading update earlier this month, the company said in a regulatory announcement to the London Stock Exchange.
The sale marks Cadbury's full retreat from soft drinks. It has refocused on the resilient confectionery sector where its brands include Trident gum, Halls cough drops, Roses chocolates and Wispa. Asahi and other Japanese brewers have been looking to diversify by expanding overseas and into non-alcohol drinks and food, as analysts see the Japanese beer market as being mature and low growth.
''The successful sale of Schweppes Australia will complete Cadbury's divestment of its beverage operations,'' CEO Todd Stitzer said in a statement. ''Cadbury will focus solely on growing its chocolate, gum and candy portfolio.'' Schweppes Australia is the country's second-largest non- alcoholic drinks maker and had gross assets of £279 million in the year ended 31 December 2007, Cadbury said.
Cadbury said it expects pre-conditions to closing the sale will have been completed by the end of April next year. The group said cash proceeds from the disposal had been earmarked towards repaying a €600 million bond that matures in June next year.
Shares in the Cadbury fell 0.93 per cent to 586 pence.