GlaxoSmithKline is to sell its drinks brands Lucozade and Ribena to Suntory Beverage & Food Ltd (SBF), the Japanese consumer goods company, for GBP 1.35 billion (AUD 2.4b) in cash. It is expected that the transaction will be completed by the end of the year, subject to regulatory approvals.
GSK's consumer business has been increasing its focus around a core portfolio of healthcare brands, with a particular emphasis on emerging markets. As part of this, the company initiated a strategic review of Lucozade and Ribena in February 2013 and subsequently announced its decision to divest the brands subject to getting the right price.
The net proceeds of the transaction after tax, fees and costs are estimated to be approximately GBP 1.3 billion. The proceeds will be used to reduce debt and for general corporate purposes.
Annual sales of the two brands were approximately AUD 893 million in 2012.
The transaction is an asset deal that will be completed on a cash and debt free basis. SBF will acquire global rights to the brands and GSK's Coleford manufacturing site, which is 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 SBF under the provisions of English employment law. In Nigeria, GSK will continue to manufacture and distribute Lucozade and Ribena under licence from SBF.
GSK chief strategy officer David Redfern 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. We believe the future of Lucozade and Ribena is in good hands given SBF's established beverages business, ambitious growth plans and also their recognition of the strong performance and capability of the GSK employees working on these products."
Suntory Beverage & Food Ltd is a global soft drink company, headquartered in Japan and listed on the Tokyo Stock Exchange, with an integrated platform across four key regions: Japan, Europe, Oceania and South East Asia. SBF has an extensive product line-up and in 2012 was the No. 4 supplier of soft drinks globally and 2nd in Japan. SBF is a core company of Suntory Group, which was founded in 1899. With global consolidated sales of over £12 billion in 2012, Suntory 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.
