Cadbury cuts dividend for Adams unit buyout

Steps to purchase the confectionery business of Adams from Warner Lambert India have been initiated by Cadbury India. In order to provide re...

Steps to purchase the confectionery business of Adams from Warner Lambert India have been initiated by Cadbury India. In order to provide resources for the purchase, Cadbury India — which was recently delisted from The Stock Exchange, Mumbai — has reduced its dividend to Rs 2 per share for the year 2002 from Rs 6 per share in the previous year.

For the year 2000-01, when Cadbury India was a listed company, a dividend of Rs 5 per share was declared. On the reduction in the rate of dividend post-delisting, a Cadbury India spokesperson stated: “This is being done in order to provide resources for the purchase of confectionery business of Adams from Warner Lambert India and other business needs.”

Parent Cadbury Schweppes had agreed to buy Adams from Pfizer Inc for a total gross cash consideration of $4.2 billion. The move will add Halls medicated sweets and Trident sugar-free gum to its portfolio and make it the world’s largest confectionery group when the deal is complete. The deal was due to be completed by the end of March.

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Cadbury India is also understood to be on the look out for acquisition opportunities that can help create and enhance value. It was among other Indian and multinational companies to opt for delisting its shares from the stock exchange. Cadbury Schweppes Plc now owns over 93 per cent of the equity of Cadbury India. The parent company and its associate Cadbury Schweppes Mauritius had increased stake in Cadbury India to 90 per cent by buying out around 39 per cent of the public shareholding around mid-2002.

It followed that up with a second open offer acquiring an additional 3.2 per cent stake. The exit option was provided to shareholders at Rs 500 per share during one year from the date of listing.

The Indian subsidiary had reported a net profit of Rs 73.51 crore net profit in 2002 as against Rs 59.27 crore in the previous year, a jump of 23 per cent. Sales are said to have increased by 9.73 per cent to Rs 687.3 crore from Rs 626.32 crore. In the fourth quarter of 2002, the net profit was Rs 18.6 crore.