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GSK To Sell Nutritional Drinks Lucozade, Ribena To Suntory For $2.1 Bln Cash

GSK To Sell Nutritional Drinks Lucozade, Ribena To Suntory For $2.1 Bln Cash
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British pharmaceutical giant GlaxoSmithKline Plc. (GSK: Quote,GSK.L) Monday said it has reached an agreement to sell its nutritional drinks brands Lucozade and Ribena to Suntory Beverage & Food Ltd or SBF, a Japanese consumer goods company, for 1.35 billion pounds or $2.11 billion in cash. The transaction is expected to be completed by the end of the year. GSK's Consumer Healthcare business has been increasing its focus around a core portfolio of healthcare brands, with a focus on emerging markets. As part of this, the company initiated a strategic review of Lucozade and Ribena in February. Annual sales of the two brands were about 0.5 billion pounds in 2012. The net proceeds of the transaction after tax, fees and costs are estimated to be about 1.3 billion pounds. The net profit will be excluded from core operating profit and earnings per share in 2013. The proceeds will be used to reduce debt and for general corporate purposes. GSK said the transaction is an asset deal that would be completed on a cash and debt free basis. SBF will acquire global rights to the brands and GSK's Coleford manufacturing site, located in the Forest of Dean in the UK.

The vast majority of employees at the site and those working on Lucozade and Ribena in commercial and R&D functions will transfer to SBF. In Nigeria, GSK will continue to manufacture and distribute Lucozade and Ribena under licence from SBF.

GSK had said in April that a strategic review of the brands concluded that their growth potential, particularly outside the core Western markets, could be better leveraged by companies with existing category presence and infrastructure in these regions. David Redfern, chief strategy officer of GSK, said today, "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." GSK.L is currently down 0.2 percent at 1,648 pence.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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