Japan's Suntory closing in on deal to buy Lucozade & Ribena brands

Friday 06 September 2013 08.22
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GlaxoSmithKline set to sell its Lucozade and Ribena brands
GlaxoSmithKline set to sell its Lucozade and Ribena brands
90% of all the blackcurrants farmed in Ireland and Britain end up in Ribena
90% of all the blackcurrants farmed in Ireland and Britain end up in Ribena

Japan's Suntory Beverage & Food is in advanced talks to buy GlaxoSmithKline's Lucozade and Ribena drinks for more than £1 billion sterling.

A deal - which would pre-empt an auction of the brands, could be announced in the next few days, one of the sources said yesterday.

GlaxoSmithKline - Britain's biggest drugmaker - announced plans in April to sell Lucozade and Ribena, which are big sellers in Ireland and Britain but lack global reach, as the company seeks to make its consumer health business more focused.

The sale had been expected to attract interest from drinks companies and private equity houses.

Suntory, however, was early on seen as a likely front-runner given its desire to build up its European drinks business after buying Orangina Schweppes for more than 300 billion yen ($3 billion) in 2009.

Officials at GSK and Suntory declined to comment on the situation. Lucozade and Ribena have annual sales of just over £500m a year and industry analysts have been expecting a buyer to pay around two times sales.

A decision to sell the businesses directly to Suntory, bypassing a formal auction, would be a blow for private equity houses and other possible trade buyers that had also been lining up potential bids.

Lucozade and Ribena no longer fit well in GSK's portfolio, since the company is focusing its consumer health operations increasingly on emerging markets, where both brands are relatively weak.

Both are veteran products - Lucozade was launched in 1927 and Ribena introduced 10 years later - yet they remain popular in Ireland and the UK where they command a prominent position in retail outlets. Ribena, in particular, is anchored firmly in its home market, both in terms of demand and supply.

Around 90% of all the blackcurrants farmed in Ireland and Britain end up in the famous purple drink.