Cadbury secure deal to buy Adams
Sweets and drinks conglomerate Cadbury Schweppes today agreed to pay £2.7bn in cash for Adams, a US chewing gum manufacturer owned by Pfizer.
The deal buys chewing gum brands Trident, Dentyne and Bubblicious for Cadbury, along with Halls cough drops and Certs breath mints. It also puts Cadbury in joint leadership position of the world wide confectionery market alongside Mars and Nestle, and second only to Wrigleys in chewing gum with a 26% share.
Cadbury's chief executive, John Sunderland, said: "Adams brings powerful brands, access to new geographies and significant scale in the fastest growing confectionery sectors."
Today's deal is Cadbury's biggest ever acquisition and will add 11,586 staff spread across 19 countries. Adams employs around 400 to 500 staff in the UK, where it has a factory in Manchester. Mr Sunderland said it was "too early to say" if there would be any job cuts following the deal.
The group is aiming to generate cost savings of £78m by 2006 under the deal. Costs of integrating the business are expected to add up to £30m during the first two financial years following the deal and Cadbury is also anticipating a £120m restructuring spend.
The Adams business was put up for sale by Pfizer in the summer. Pfizer bought the group as part of its acquisition of Warner-Lambert in 2000 and put it up for auction after a two-year bar on selling it expired.
Swiss group Nestle and US giant Kraft Foods were understood to have also been in the contest but Cadbury emerged as the front-runner after failing to secure the Hershey chocolate business in the summer.
The Adams business has the bulk of its sales in North, Central and South America - which make up 75% of turnover.
Mr Sunderland quashed speculation that the group paid too much for Adams - some analysts had valued the business at around $4bn (£2.5bn). "We feel we understood this business better than anyone outside Adams themselves," he said. The deal, which will be financed by debt, is expected to be completed by Easter.
Cadbury added that trading remained in line with previous updates and it would announce its full-year results in February.