A little bit of fruit and fizz

Published On 12/09/2013 | By Kim de Kock | Mergers

GlaxoSmithKline has made a strategic decision to focus on its core healthcare brands and has, therefore, agreed that its Consumer Business will sell two of its key nutritional drink brands to Japanese consumer goods company, Suntory Beverage & Food Ltd (Suntory).  The two brands being divested as part of a £1.35 billion cash deal (approximately AUD2.286 billion) are Lucozade and Ribena, both of which are iconic brands in the UK and both are sold locally in Australia.

Under the agreement, Suntory will acquire global rights to both brands, as well as the manufacturing site in Coleford in the UK, but GSK will continue to manufacture and distribute the products in Nigeria under a licence arrangement between the parties.  The deal will realise significant value for GSK shareholders and will expand Suntory’s existing brand portfolio and enable the company to grow outside of its domestic Japanese market.

The deal is subject to regulatory approvals, including competition clearance from the European Commission. From a competition perspective, it is anticipated that the deal will give rise to small overlaps, as Suntory owns the Schweppes and Orangina brands in parts of Europe and, in the United Kingdom, it distributes Orangina under an agreement, as well as owning competing energy drink ‘V’.  As the overlaps are small, no major competition issues are anticipated.

While it’s not clear at this stage whether ACCC approval will be required or not, a degree of overlap appears likely as both Lucozade and Ribena are sold locally, and the Frucor Group (owned by the Suntory Group) sells energy drinks and flavoured fruit juice in Australia.

If all goes according to plan, the parties should complete the deal by the end of the year.

Photo credit: http://commons.wikimedia.org/wiki/File:Ribena_Tetrapak.jpg

About The Author

is a Senior Associate in the Sydney office of King & Wood Mallesons where she specialises in anti-trust law, with a focus on mergers and acquisitions, access matters as well as general competition issues. Outside of the office, Kim has recently taken up surfing... but is probably not going to be appearing on the ASP tour any time soon.

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