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Suntory agrees to buy two drink brands from GSK for US$2.1b
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Japanese drinks giant Suntory said yesterday it would buy the top-selling Lucozade and Ribena brands from British drugs firm GlaxoSmithKline for US$2.1 billion.
The deal, part of Suntory’s bid to expand overseas to counter a shrinking domestic market, was expected to be completed by the end of the year.
Energy drink Lucozade and the Ribena juice brand would help Suntory’s food and beverage unit to hit a 2 trillion yen (US$20 billion) annual sales target in 2020, the Japanese firm said.
The non-alcoholic drinks unit, which debuted on Tokyo’s stock exchange in July after a US$3.9 billion share sale, said it would “actively pursue” more cross-border deals.
Parent company Suntory Holdings — which also distributes other foreign names including Jim Beam bourbon in the domestic market — spun off the lucrative non-alcoholic unit as it eyes more foreign acquisitions.
“We are expanding our business in emerging markets and strengthening our business platform in order to improve profitability by further developing our existing brands and growing our production and sales,” the company said in a statement.
Suntory said the deal would cut costs and give it a foothold in Britain, the second-largest drinks market in Europe.
“Complementing our existing brands, the addition of the sales network associated with these two global brands will give us a platform in countries where GSK already operates such as Nigeria as well as Malaysia and thereby enable us to expand the sales of our whole brand portfolio,” it added.
The US$2.1 billion purchase comes after Suntory bought Europe’s Orangina Schweppes Group for US$3.3 billion in 2009.
Last year, Suntory said it would form a joint venture with Chinese brewer Tsingtao to expand its reach in the world’s biggest beer market, while it has also said it would buy 51 percent of Indian food and drink maker Narang Group.
Major Japanese beverage makers have aggressively sought to expand abroad in recent years to offset their shrinking domestic market, while a strong yen made the foreign shopping spree relatively cheaper.
Yesterday, GSK said the cash sale was the result of a business review earlier this year after which it announced its desire to sell the drink brands.
“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,” the GSK said in a statement.
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