Cadbury’s on the block

Press, 13 November 1985, Page 53

Cadbury’s on the block

By Melvyn Marckus and Stella Shamoon, in the “Observer,” London

Cadbury Schweppes is up for auction — according to the Wall Street investment house, Goldman Sachs. Goldman Sachs has approached several potential suitors in Britain with a view to launching a fullscale, near £1 billion (5NZ2.438 billion) take-over bid.

refused to comment. A spokesperson in New York said: “We do not comment on transactions whether we are involved or not.”

Whether Cadbury finds it probable or not that Goldman has — or can marshal — a significant stake as a prelude to a bid, he would be well advised to pay heed. It should be remembered that at the time of Burton Group’s £6OOM ($NZ1.463 billion) take-over bid for Debenhams, Goldman Sachs was reported to be eager to play a role in the proposed — but never produced — consortium counter-bid of the chairman of Debenhams, Mr Robert Thornton.

The view is that a bidder would have to pay some 200 p a share. Cadbury Schweppes shares stand at 146 p. Goldman Sachs clients are believed to have captured close on 10 per cent of Cadbury Schweppes’ equity, which the investment house is prepared to offer as a springboard for an Ameri-can-style leveraged takeover bid for the £BOOM (?NZ1.95 billion) chocolate-to-tonic water combine.

The current American buildup in Cadbury Schweppes shares follows the offer of ADRs on Wall Street in August 1984.

The offer involved the issue of between 40M and 60M shares, and represented some 10 per cent of Cadbury Schweppes equity. The ADRs are traded over-the-counter on Wall Street. Morgan Guarantee was the bank of registration for the issue.

In recent weeks, Goldman Sachs is reliably understood to have proposed to several British companies the offer of a substantial block of Cadbury Schweppes stock accompanied by the promise of substantial banking facilities to enable a fullscale bid. ;

A bid attack for Cadbury Schweppes would follow Elders’ controversial £l.B billion ($NZ4.389 billion) leveraged take-over bid for Allied-Lyons. Goldman’s move signals the arrival of American take-over tactics in the City. Strong American buying of Reckitt and Colman’s ADRs has been seen in recent weeks and a similar play is possible there. Imperial Group, itself vulnerable to a take-over bid from a predator such as Hanson Trust, is known to be focusing its take-over sights on Rownfree Mackintosh — although it is also believed to have considered launching a take-over bid for Reckitt and Colman. — Copyright, OFNS.

Mr Dominic Cadbury, the chief executive of the enterprise, led by Sir Adrian Cadbury, said: “It sounds most improbable that Goldman Sachs hold some 10 per cent of our shares. Goldman — whom we know well — are involved in Cadbury Schweppes as market makers in New York — together with Morgan Stanley.” Cadbury went on: “The ADRs (American depository receipts) in Cadbury Schweppes are widely held by a range of investors and institutions in the United States. I have no information whatsoever that Goldman S3chs has a significant stake.” Goldman Sachs, for its part,