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Japanese firm, Suntory, to buy GSK Nigeria’s Ribena, Lucozade

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In from Allantee Success . . .

Japanese company, Suntory Beverage & Food (SBF) Limited, has made preliminary offer to purchase the drinks business of GlaxoSmithKline Consumer Goods Nigeria (GSK Nigeria) Plc. The drinks businesses include brands such as Lucozade and Ribena.

In a regulatory filing at the Nigerian Stock Exchange (NSE), the board of directors of GSK Nigeria said it has received an offer from Suntory Beverage & Food Ltd to acquire the bottling and distribution of GSK Nigeria’s drinks business.

According to the filing, based on the non-binding offer from SBF, the board of GSK has granted Suntory access to certain due diligence information in GSK Nigeria.

The transaction remains at the preliminary stage. There can be no assurance that Suntory will make a binding offer following completion of their due diligence review, or whether the terms of any such offer will be acceptable. The financial terms of Suntory’s non-binding offer remain confidential.

Besides, in the event of final acceptable offer to the board, the decision of the board is subject to shareholder and regulatory approvals.

“If the transaction is agreed and the shareholders and regulators were to approve the sale, the retained business of GSK Nigeria would comprise of its wellness, oral healthcare, nutrition and pharmaceutical and vaccines businesses, and the company would remain listed on the Nigerian Stock Exchange (NSE),” the filing outlined.

In 2013, Suntory had acquired the global brand ownership for Lucozade and Ribena from GlaxoSmithKline (GSK UK), United Kingdom, the parent company of GSK Nigeria. The deal was valued at $2.1 billion. The 2013 acquisition was the largest announced by a Japanese consumer company in 2013, according to data compiled by Bloomberg.

However, GSK Nigeria had pushed to retain the right to produce and market the Lucozade and Ribena drink brands for the Nigerian and other African markets. GSK UK excluded the Nigerian market from the deal and left the right to produce and market the drinks with GSK Nigeria. It is this right that Suntory wants to acquire to consolidate its global ownership of the two brands and especially to gain a major foothold in Africa’s largest market. Lucozade and Ribena are iconic and popular brands with the Nigerian consumers.

Suntory, a major food and beverage company that held 20 per cent share of Japan’s non-alcoholic drink market in 2012, is looking to use the Nigerian market as a window to expand its operations to West African markets.

Suntory Beverage planned to spend as much as 500 billion yen, about $5 billion then, on takeovers after holding Japan’s largest initial public offering in 2013. Mikihiko Yamato, deputy head of research in Tokyo at JI Asia, had said Suntory may want to start a new category within the energy drinks market.

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Suntory Beverage has said it plans to acquire companies in Southeast Asia, Middle East, Africa and Latin America to help double sales to 2.0 trillion yen by 2020. The Tokyo-based company derived about 31 percent of revenue from overseas markets in 2012, compared with 25 per cent in 2011, according to data compiled by Bloomberg.

The acquisition would allow the Japanese company to expand in countries where the GSK UK already operates, such as Nigeria and Malaysia.

Lucozade, an energy drink that competes with PepsiCo Inc’s Gatorade and Coca-Cola Co’s Powerade, and Ribena, a liquid

concentrate marketed toward children, had combined sales of about 500 million pounds in 2012, GSK UK had stated.

Suntory acquired global rights to the brands and Glaxo’s Coleford manufacturing site.

Suntory aims for 5.0 per cent annual sales growth in the brands which the company expects would provide “stable profits,” Chief Executive Officer, Nobuhiro Torii had said at a media briefing to announce the 2013 acquisition.

Suntory began trading July 3, 2013 after raising almost $4 billion in Japan’s biggest share sale since Japan Airlines Co’s 663 billion yen initial public offering in September 2012. Suntory Beverage, which sells Boss coffee, had bought 51 per cent of PepsiCo Inc (PEP)’s soft-drink business in Vietnam this year.

Parent Suntory Holdings, which sells whiskey and beer, remains unlisted. The beverage group bought France’s Orangina Schweppes Group for 300 billion yen in 2009 and paid 600 million euros in the same year for New Zealand’s Frucor Beverages Group.

Suntory Holdings had a 20 per cent share of Japan’s non-alcoholic drink market in 2012, the second-biggest after Coca-Cola Co’s 28 per cent, according to Inryosoken, a research company.

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