Could Cadbury Schweppes be forced to put off the planned demerger of its US drinks business, due at the end of the second quarter? Analysts at Bear Stearns believe the danger is growing.
Analyst Simon Marshall-Lockyer said this morning: "Following a further deterioration in the debt markets we believe there is now at least a 50/50 risk that Cadbury might postpone the separation of its US beverages business.
"The company needs to raise an estimated £1.7bn for the beverages business to repay current commercial paper held by the Cadbury Schweppes PLC.
"At the post results meeting on February 20 2008 Ken Hannah, finance director, indicated that were the financing of the balance sheet not secured at the expected levels by end-March, the company might have to reconsider the separation of the businesses until credit markets improved.
"We have cut our current beverages valuation by 10% from £6bn ($12bn) down to £5.4bn ($10.8bn), which lops another 19p off our fair value estimate of 542p for the combined entity, reducing it to 523p."
Cadbury is now 9p lower at 546p.
Elsewhere Barclays slipped 8.25p to 418.75p as a rumour went round the trading rooms that it could be interested in bidding for troubled Societe Generale. This outweighed a positive recommendation today from UBS which said: "Barclays is our preferred stock among the UK domestic banks; we believe that the short-term risks have decreased while growth rates are among the highest in the sector in coming years."
