Undaunted by its thwarted bid for US confectioner Hershey, UK chocolate and soft drinks group Cadbury Schweppes is putting the final touches to a £3bn (US$4.7bn) bid for the Adams gum division, another major player in the US confectionery sector.
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Adams has been put on the auction block by its chemicals group parent Pfizer, and bids are expected around the middle of October. According to a report in the Sunday Times, Cadbury CEO John Sunderland is determined to expand his group’s holding in the chewing gum market, and promptly turned his attention back to the Adams deal once the trust behind Hershey Foods took the US candy maker off the market last week.
The chewing gum market is attractive to Cadbury because its traditional core markets are experiencing largely flat sales. Although the company’s confectionery is sold around the world, 90% of profits come from just a handful of key markets – North America, Europe and Australasia. Unfortunately for Cadbury it is becoming increasingly difficult to make large advances in these mature markets. Adams owns well known gum brands including Trident, Clorets and Dentyne and would make Cadbury a dominant force in a surprisingly active market.
Cadbury has retained the services of Goldman Sachs to advise it on the deal.
To see a feature on Cadbury’s aspirations in the gum market, just-food.com members click here.
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