Suntory In Talks To Buy Lucozade and Ribena
The Japanese company Suntory Beverage & Food is in secret talks with GlaxoSmithKline (GSK) about a takeover of Lucozade and Ribena, two of Britain's most popular soft drinks.
Sky News can exclusively reveal that Suntory has been in detailed discussions with GSK for the last few weeks about an offer that would pre-empt an auction of the two brands that was due to get underway later this month.
People close to the talks said on Thursday morning that a deal for GSK to sell Lucozade and Ribena could be sealed within days, although they cautioned that the negotiations could yet be delayed or falter altogether.
A deal would be likely to cost Suntory, which raised billions of dollars from a stock market listing earlier this year, in the region of £1.5bn, or almost 15 times the projected 2013 profits of the two drinks.
Executives from the Japanese company, which already owns Orangina and Schweppes, have been involved in visits to GSK production sites and held management presentations during recent weeks.
One insider said that Suntory executives sought approval from the company's board for a binding offer for Lucozade and Ribena late last week. It is unclear what the outcome of that discussion was.
If a deal does get completed, it would make Suntory an even larger player in Britain's soft drinks market, competing with the likes of Coca-Cola, Pepsico and Britvic.
Any pre-emptive deal between GSK and Suntory would be frustrating for many of the world's biggest private equity firms, some of which say privately that they were given assurances that there would be a full and open auction for Lucozade and Ribena.
Blackstone and Lion Capital - which sold Orangina and Schweppes to Suntory in 2009 for £1.5bn - have been working on an offer for the business with Graham Neale, a former GSK drinks executive.
CVC Capital Partners is being advised by McKinsey, the management consultancy, on its interest, while Sky News understands that Cinven has enlisted help from Paul Moody, the former boss of Britvic. KKR, another major buyout firm, has been working with Michael Clarke, former chief executive of Premier Foods, on a bid for the two drinks.
GSK said earlier this summer that it hoped to sell the brands, which it decided were not core to its business, by the end of the year and hired JP Morgan and Greenhill, the investment banks, to oversee the sale.
The British pharmaceuticals group, which has been embroiled in a crisis over allegations of corruption at its Chinese business, could yet opt to keep the two products or pursue a joint venture with a partner if it proves unable to secure a desirable price for Lucozade and Ribena.
Such an outcome would embarrass GSK given its decision to pursue pre-emptive discussions with Suntory despite intense interest from other potential buyers.
If Suntory does buy the drinks, the deal would represent the latest in a glut of British-owned assets being taken over by Japanese buyers.
Key deals in recent years have included the acquisition of Gallaher Tobacco by JTI, and last year's takeover by Aegis, the media buying group, by Dentsu, a Japanese rival.