GlaxoSmithKline plc (NYSE:GSK) (LON:GSK), the largest pharmaceutical company in the United Kingdom, is in advanced discussions with Japan’s Suntory Beverage & Food Ltd (TYO:2587) regarding the sale of its Lucozade and Ribena drink brands based on information from sources familiar with the negotiations.
One of the people familiar with the issue said that GlaxoSmithKline plc (NYSE:GSK) (LON:GSK) could price its drink brands as much as £1 billion—or $1.6 billion—and it might be able to reach an agreement with Suntory Beverage & Food Ltd (TYO:2587) by September 9 at the earliest date.
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GlaxoSmithKline decision of selling through auction
In April, GlaxoSmithKline plc (NYSE:GSK) (LON:GSK) announced its decision to sell Lucozade and Ribena through an auction, which is scheduled to start this month. The pharmaceutical company previously announced its intention to split Lucozade and Ribena as part of its transformation efforts following a strategic review. The company is focusing its business operations on developing new medicines and other related products.
Suntory Beverage & Food Ltd (TYO:2587) indicated its plans to spend as much as $5 billion (¥500 billion) on acquisitions after its initial public offering (IPO) in July. According to the Japanese firm, it has not reach any agreement with GlaxoSmithKline plc (NYSE:GSK) (LON:GSK).
In a telephone interview with Bloomberg, Kana Kamitani, spokesperson for Suntory Beverage & Food Ltd (TYO:2587) said, “Nothing has been decided on this merger news as of now. For our future growth, we are seeking every possibility.”
Lucozade and Ribena are solid brands in the United Kingdom
Panmure Gordon analyst Damian McNeela commented that Lucozade and Ribena are solid brands in the United Kingdom. He noted that the sales of Lucozade are increasing overseas. Last year the sports drink generated £600 million. Ribena is a concentrated blackcurrent drink.
McNeela added the he was surprised regarding the decision of Suntory Beverage & Food Ltd (TYO:2587) to acquire Lucozade and Ribena, because the company previously stated that it is targeting developing markets.
There are also private equity firms interested in acquiring GlaxoSmithKline’s drink brands including The Blackstone Group L.P. (NYSE:BX), Lion Capital, and PAI Partners. In July, there had been reports that A.G. Barr plc (LON:BAG) is considering submitting a £1 billion offer to GlaxoSmithKline plc (NYSE:GSK) (LON:GSK) for the Lucozade & Ribena brands.
The report regarding GlaxoSmithKline and Suntory’s negotiation was first reported by Sky News.