Cadbury Schweppes unveiled the biggest restructuring plan in the group’s history yesterday in a bid to redefine itself as a pure sweets and chocolate maker and to bolster its defences against a possible takeover.

Todd Stitzer, the chief executive, speaking before the expected £7.5 billion sale of its American beverages unit to private equity, outlined plans to cut nearly 8,000 jobs, or 15 per cent of the company’s 52,500-strong global work-force, and close ten of its 70 factories, by 2011.

He said that the aim was to create an efficient “standalone confectionery business” and to boost Cadbury’s 10 per cent share of the $137 billion (£69 billion) global market for chocolate, sweets and chewing gum.

“Despite our size, we remain cost-disadvantaged and too complex from a supply chain and commercial standpoint,” Mr Stitzer said.

He declined to offer details of where the cuts would fall, but said that Cadbury would seek further savings by simplifying its range of products, outsourcing IT and back office functions and merging some regional offices, such as Canada and the United States and Brazil and Argentina, into single business units.

Mr Stitzer also said that the company plans to drop the Schweppes name this year after the likely sale of the American drinks unit, which owns brands including Dr Pepper and 7-Up.

The company would continue to invest in high-growth markets, such as reduced sugar candy, chocolate and chewing gum, and was hoping to raise profit margins from 10 per cent to about 15 per cent by 2011.

He said that the radical changes would help to fend off the threat of a possible takeover of the rest of the group by private equity.

“Performance is the arbiter of shareholder value,” Mr Stitzer said. “I would assess a high likelihood of the company remaining independent.”

The renamed Cadbury plc will use the proceeds of the sale – estimated at about £7.5 billion – to pay off up to £2 billion of its £3 billion of debts, top up its pension fund and return cash to shareholders.

Mr Stitzer also said that the group had earmarked between £500 million to £1 billion from the sale as a warchest for bolt-on acquisitions.

Nevertheless, analysts were sceptical that the plan was aggressive enough to preserve Cadbury’s independence.

Rob Mann, analyst at Collins Stewart, said that the company needed to consider a more transformational deal, such as a tie-up with Hershey, of America. He said that Cadbury represented a “huge opportunity” to private equity firms such as Kohlberg Kravis Roberts because of its portfolio of leading brands and its conservative balance sheet.

“Our central cost burden remains too high,” Ken Hannah, chief financial officer, said, adding that the restructuring would cost the company a total of about £650 million.

Cadbury employs 6,000 staff in the UK, including plants in North Wales, Devon, Sheffield, Herefordshire, Bournville in Birmingham and Keynsham near Bristol, plus its head office in Mayfair, Central London, and commercial offices in Hertfordshire.

Plan of action

- Close 10 of 70 confectionery factories

- Cut 7,800 jobs out of 52,500

- Merge regional offices - eg: Brazil/Argentina and Canada/United States

- Simplify range of products and reduce number of different varieties and sizes

- Invest in high-growth products, including gum and reduced sugar and fat chocolate and candy

- Sell Americas Beverages, probably to private equity, for about £7.5 billion

- Use proceeds to return cash to shareholders, pay off some of £3 billion of debts, top up pension scheme and for acquisitions

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