Cadbury Schweppes (NYSE: CSG) finally set the date for the highly anticipated spin-off of its U.S. beverages unit in a 6-K filing with the SEC. Shares in the spin-off are to list on the New York Stock Exchange on May 7th if the measure is approved at the company’s upcoming April 11th meeting. The division - to be called Dr Pepper Snapple Group - includes Schweppes, Dr Pepper cola, Canada Dry ginger ale and fruit-flavored Snapple teas. So, should investors look to buy into this spin-off?

The Dr Pepper Snapple Group will own some of the best brands in the industry. Snapple alone has proven to be a great investment for its many holders, including Nelson Peltz who purchased it for $300 million and sold it for $1.5 billion in just three years! Last year, Cadbury received a large offer from two consortiums of investors including Blackstone, Lion Capital, Bain Capital, TGP and Thomas Lee. However, the company rejected all of these offers in favor of a spin-off.

Spin-offs themselves are worth watching because they create opportunity through inherent neglect. Studies have shown that spin-offs tend to significantly outperform the S&P 500 in the first two years by as much as 31% in one study. It is worth noting, however, that the optimal time to buy a spin-off is seen as six months after it takes place. Price performance suggests that this is typically an optimal period to buy to realize the maximum price appreciation over the next 12 to 18 months.

Cadbury has yet to approve the spin-off and provide additional financial details, but this is definitely a situation that investors should watch. There is clearly a lot of interest in the U.S. beverages division while the spin-off process itself is known for generating value for shareholders. Combined, these factors make CSG a stock worth watching over the next year or so as this spin-off comes to fruition!

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