Cadbury Schweppes is splitting itself in two in a potential £19 billion break-up of one of Britain’s biggest firms.

The confectionery giant, home to Dairy Milk, Trident chewing gum and 7UP, confirmed today that it wanted to hive off its largely American drinks business and retain its confectionery empire.

Todd Stitzer, the chief executive, said: “This is a hugely important development.

“Now is the right time to separate the business and focus Cadbury on becoming the biggest and best confectionery company in the world.”

Shares in the group raced more than 5 per cent, or 33p, to a new high of 635p.

Confirmation of the move follows 48 hours of intense takeover speculation sparked by the revelation on Tuesday by Nelson Peltz, the American financier, that he had taken a near-3 per cent stake and was pressing for a break-up.

The Times revealed today that the private equity groups Lion and Blackstone were weighing up bids for the drinks business, which also includes Dr Pepper and Canada Dry.

Mr Stitzer insisted that Cadbury had not received a bid for either part of the group and that it had been planning a separation for months.

He added that in the past fortnight Cadbury’s had spoken to investors responsible for about 40 per cent of the group’s shares and that they were supportive of its plans.

“We have been working on this for some time,” Mr Stitzer said.

“The level of speculation in the market made it appropriate to accelerate the development on our plans.”

Cadbury’s, which merged with Schweppes in 1969, declined to give any more detail on how it would proceed with a split.

Mr Stitzer said that more information would be given alongside a trading update on June 19.

However, the group is almost certain to face a flurry of bids before then.

As well as private equity interest in the drinks business, trade rivals such as Kraft and Mars are almost certain to consider a move for the confectionery arm, which generates 60 per cent of the group’s revenue.

The business has snapped up the Hollywood and Adams chewing gum businesses in recent years and holds a 10 per cent share of the global market for chocolate, candy and gum.

Cadbury’s market capitalisation is £13 billion but analysts have put a break-up value on the group at nearly £19 billion.

Analysts assert that the drinks business, bought in 1995, is worth between £6.5 billion and £8 billion on its own.

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