Cadbury Schweppes' (NYSE:CSG) U.S. beverages business may receive significant interest from twelve private equity firms, according to an article in the Wall Street Journal. The first major group of contenders consists of Blackstone, KKR and Lion Capital while the second is composed of Bain Capital, Texas Pacific and Thomas Lee. It is uncertain whether the other six firms interested are considering joining a consortium or plan on placing individual bids.

Cadbury expects the beverages division to draw more than 8 billion that it would return to shareholders via a share buyback or special dividend. The move would unlock significant value but would not preclude the company from making acquisitions of its own, as the company has a strong balance sheet and could easily raise an additional 10 billion if needed.

Cadbury, without its beverages division, would be the largest confectionery group in the world and could work to increase its already-dominant position. This is good news for the long run, but may hurt the share price in the short term depending on the terms of any acquisitions. Consequently, this deal could turn out to be a mixed bag for shareholders in the short term.

While the company was quick to note that the decision to put the division up for sale has not been officially announced, CSG is definitely a stock to keep an eye on given the significant interest by private equity!

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