Japan's Suntory to pay $2.11 bn for GSK’s Lucozade, Ribena soft drink brands

Japan's Suntory Beverage & Food Ltd (SBF) yesterday agreed to buy the Lucozade and Ribena brands from GlaxoSmithKline Plc (GSK), for £1.35 billion ($2.11 billion) in order to expand its soft drinks portfolio in Europe.

SBF, a unit of Japanese brewing and distilling giant Suntory Holdings Ltd, has been in discussions with GSK for the last few weeks and a deal would pre-empt an auction of the brands that was to start later this month.

In April, the London-based company said that it would sell Lucozade and Ribena, with analysts speculating that the two brands would fetch over £1 billion ($1.5 billion). (See: GlaxoSmithKline plans to sell Lucozade and Ribena soft drink brands)

Lucozade and Ribena, Britain's most popular soft drinks brands, contributed nearly £500 million last year to GSK's global sales of £26.4 billion.

Lucozade, a glucose-based sports drink, was launched in 1927, and over 80 years, GSK has expanded this product to five different categories.

First made using blackcurrants in the 1930s, Ribena is a fruit drink available in a number of different flavours, including apple, orange, raspberry and pomegranate. The best-selling variety is still made from fresh blackcurrants.

GSK said that the net proceeds from the sale after tax, fees and costs are estimated to be approximately £1.3 billion, which would be used to reduce debt and for general corporate purposes.

SBF will acquire global rights to the brands and GSK's Coleford manufacturing site located in the Forest of Dean in the UK. The vast majority of employees at the site and those working on Lucozade and Ribena in commercial and R&D functions will transfer to Suntory under the English employment law. 

In Nigeria, GSK will continue to manufacture and distribute Lucozade and Ribena under licence from Suntory.

David Redfern, chief Strategy officer of GSK, said, ''Lucozade and Ribena are iconic brands that have made a huge contribution to GSK over the years, but now is the right time to sell them as we increase the focus of our Consumer Healthcare business and execute the delivery of our late stage pipeline of pharmaceuticals and vaccines.''

Tokyo Stock Exchange-listed SBF is flush with funds after having raised $4 billion in June through an initial public offering.

SBF bought the Orangina Schweppes drinks brand in 2009 for more than $3 billion and Frucor energy drinks for €600 million.

SBF has an extensive product line-up and in 2012 was the number 4 supplier of soft drinks globally and 2nd in Japan.

With global sales of over £12 billion in 2012, it has a range of businesses encompassing alcoholic beverages, wellness, food, restaurants and flowers with approximately 200 companies and 29,000 employees across Japan, Europe, Asia Pacific and the Americas.