Updated from 9:42 a.m. EDT

Cadbury Schweppes


said it expects to sell its U.S. drinks business and focus on candy in a restructuring that will eliminate 7,500 jobs.

The U.K.-based global confectionary giant is ramping up its efforts to increase margins through a reduction in jobs, manufacturing sites and products. It said it will cut its staff by 15% between 2008 and 2011 and set a goal of boosting candy operating margins from 10% in 2006 to the mid-teens by 2011.

Cadbury also said it continues to pursue a sale or spin-off of its drinks business.

The New York Times

reported Monday that an announcement to that effect was imminent.

"The sale process is actively under way, and following expressions of interest, we now believe that a sale is the more likely outcome," Cadbury said Tuesday.

Dr Pepper, Snapple and Motts will all be sold following Cadbury's announcement in March that it was separating the drinks unit from the confectionary group. Investors have been speculating that the expected sale of the drinks business could propel Cadbury into a purchase of


(HSY) - Get Report

or a sale to the likes of




( KFT).

Charles Schwab places the beverage unit's value at $16 billion, and if the capital gains tax rate remains 12%, then net proceeds would be $15 billion.

The sale is expected to cost 5% of valuation, an expense which Cadbury would have had to assume whether it spun-off the businesses or sold them. CFO Ken Hanna says he expects the restructuring to cost 100 million pounds this year, a figure that could reach 650 million pounds when it is completed.

The news comes as CEO Todd Stitzer met with investors in London Tuesday and in New York on Wednesday. Schwab raised its price target by $8 to $59 following the interim trading update. The stock was trading down 30 cents to $55.75 following the presentation on Tuesday.

The global confectionary market is $137 billion, or 9% of the total packaged foods market. It also offers higher margins than beverages, prompting Cadbury's decision.

Hanna said the company has been in catch-up mode since 2003. Its margins trail its peers' by more than 400 basis points. Since then, the company has embarked on a campaign to acquire strategic confectionary companies, most recently purchasing the Japanese candy maker Sensei.

At the same time, Cadbury is trying to reduce the number of offerings in its existing lines. Hanna notes that margins for products like Hall's cough drops have been held back by the many varieties and packaging differences created through innovation.

Cadbury will be the new name of the company and a new global performance director will oversee productivity programs.