Cadbury deal threatened by credit crunch

Cadbury Schweppes’ £8bn (€11bn) sale of its US drinks business could be under threat as bidders struggle to raise debt in tightening credit markets, it was reported today.

The sale of the US business, which includes Dr Pepper, Snapple and 7-UP may be delayed or even cancelled after banks were forced to lower the amount of debt used to back the deal, the Times newspaper said.

Investment bank Morgan Stanley, which is handling the sale, declined to comment. It is said to be lowering its lending terms to ensure the debt can be syndicated to institutional investors.

The Cadbury Schweppes sale is the latest major deal to be impacted by tougher credit markets amid investor fears over the sub-prime mortgage crisis in the US.

The £11.1bn (€16.5bn) buyout of Alliance Boots has also become more expensive for private equity firm Kohlberg Kravis Roberts after the company was reportedly forced to offer more favourable terms to lenders.