Cadbury PLC made its debut as an independent confectionery company on Friday after spinning off its U.S. drinks arm, hitting the London Stock Exchange boards at a lower-than-expected price but then rising amid speculation about further consolidation in the candy industry.
The maker of Dairy Milk chocolate, Trident gum and Hall cough drops began trading at 622 pence ($12.35). The stock rose throughout the session to close at 640 pence ($12.71) _ the level it had been expected to open at.
That gives the group, one half of the former Cadbury Schweppes PLC, a market capitalization of around 8 billion pounds ($16 billion), enough to ensure it stays in the FTSE-100 index of leading shares.
The other half of Cadbury Schweppes, the North American beverage business to be called Dr Pepper Snapple Group Inc., will begin trading on the New York Stock Exchange on Wednesday.
"The separation of beverages allows us to take the company back to the future," said Cadbury's chief executive, Todd Stitzer. "The past few years have seen a transformation of the group's performance, and as a focused confectionery company we will be able to do better still."
The listing comes as Cadbury is set to be overtaken as the world's largest confectionary business by Mars Inc. The U.S. candy maker earlier this week announced a $23 billion takeover of Wm. Wrigley Jr. Co., bringing together brands including Snickers, M&Ms, Juicy Fruit, Orbit, Extra and Big Red.
Cadbury currently has 10.1 percent of the market. The combined Mars-Wrigley would have 14.1 percent.
Analysts have speculated that Cadbury will seek a deal with The Hershey Co. A matchup between the pair would be mutually beneficial _ Cadbury lacks Hershey's U.S. presence, while Hershey lacks Cadbury's global reach.
If that fails, Cadbury could be a takeover target itself with Kraft Foods Inc. named as a likely suitor.
Landsbanki upgraded Cadbury to buy from reduce.
"Cadbury is now a pure-play confectionery business with substantial exposure to fast-growing emerging markets and wellness categories," the brokerage said, putting a 750 pence ($14.84) target price on the company.
Standalone Cadbury has revenues of more than 5 billion pounds ($9.8 billion).
Cadbury aims to deliver sales growth of 4 percent to 6 percent a year and to see profit margins in the mid-teens by 2011, under a plan which calls for cutting 7,800 jobs and closing 15 percent of its factories worldwide.
Cadbury won approval from shareholders for the split into two units last month after facing pressure from investors led by U.S. billionaire Nelson Peltz. Its initial plan to sell the beverage unit was foiled by turmoil in the global credit markets.
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