Cadbury Schweppes seals its refinancing and split

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The news was welcomed by investors, who had been growing increasingly scared that the deal could be scuppered again by the credit crunch. Instead the split is coming sooner than expected.

By mid-May the company will have turned into a confectionery business listed in London and a soft-drinks business called Dr Pepper Snapple Group listed in New York. Each should be valued at well over £5 billion.

Cadbury will own the chocolate brands like Dairy Milk, Creme Egg and Green and Black's alongside Trident gum and Halls cough sweets. DPSG will own 7 UP, Sunkist and Schweppes.

Cadbury was forced into the split after the arrival on its share register of US corporate raider Nelson Peltz with a 4.5% stake. Initial plans to sell off the soft-drinks business foundered last year as the credit crunch effectively closed the market to large private-equity deals from last summer onwards and Cadbury, led by Todd Stitzer, had to opt for demerger.

But ahead of the split the group had to re-arrange its debt to ensure that both companies had investment grade rankings from the credit rating agencies and to ensure that the US soft-drinks business had switched any UK borrowings into US debt.

But the deal has come at a cost with the five banks behind the refinancing - JPMorgan Chase, Bank of America, Goldman Sachs, Morgan Stanley and UBS - along with other advisers, collecting fees totalling £180 million. That is for refinancing Cadbury Schweppes' likely debt of £3.2 billion (plus the £220 million cost of its final dividend), which makes a total debt between the two companies of £3.6 billion.

Today's announcement that Cadbury will end up with £1.65 billion of the loans means that its should get an investment grade credit rating from Standard & Poor's. DPSG will have net debt of approximately $3.8 billion (£1.9 billion) and will be assigned a credit rating slightly lower than Cadbury's but still of investment grade.

Shareholders will be asked to vote on the plans on 11 April. Trading in Cadbury shares on the London Stock Exchange starts on 2 May with DPSG shares starting trading on the New York Stock Exchange on 7 May.