Suntory of Japan is to pay £1.35 billion (€1.6 billion ) to buy GlaxoSmithKline's high-profile consumer drinks brands Lucozade and Ribena.
The deal, which should provide net proceeds after tax, fees and costs of £1.3 billion for GSK, ends British ownership of the decades-old popular beverages that have proved especially successful in Britain and Commonwealth countries. The products generated about £500 million in sales last year.
The disposal follows the decision by GSK, the UK-based pharmaceutical group, to focus on products directly linked to healthcare and with the potential to grow in emerging as well as industrialised markets.
The deal was triggered by Suntory’s decision to pre-empt an auction of the two brands as it sought to expand its range of soft drinks and boost sales in markets including Britain, Asia and Africa.
Some potential bidders risked triggering antitrust concerns, but the Japanese group faced potential rival acquirers, including the UK's AG Barr.
David Redfern, 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."
Under the terms of the deal, which is still subject to regulatory approval, Suntory will acquire global rights and GSK’s Coleford manufacturing site in the UK. In Nigeria, GSK will continue to manufacture and distribute Lucozade and Ribena under licence from Suntory.
The company launched a formal strategic review of Lucozade and Ribena this spring, which led to the appointment of advisers to seek the disposal of the two products.
Suntory, maker of the eponymous whisky but best-known outside Japan for its Orangina Schweppes business, had been viewed as one of the strongest candidates to buy the drinks.
The family-controlled drinks manufacturer had raised $4 billion of potential new acquisition funds in June by spinning off its soft drinks operations in an initial public offering.
GSK said it would exclude the net profit on the disposals from its core operating profit and earnings per share in 2013, and that the proceeds would be used to reduce debt and for general corporate purposes. – (Copyright The Financial Times Limited 2013)