UPDATE 1-Suntory to buy GSK's Lucozade, Ribena for $2.1 bln
LONDON, Sept 9 (Reuters) - Japan's Suntory Beverage & Food Ltd is to buy GlaxoSmithKline Plc's Lucozade and Ribena brands for 1.35 billion pounds ($2.11 billion) to broaden its soft drinks portfolio and help it expand into new markets.
The acquisition, announced by the companies on Monday, had been widely anticipated since people close to the process said last week that Suntory was in advanced talks on a deal that would pre-empt an auction of the iconic British drinks.
Japan's second-largest drinks maker has plenty of cash after an initial public offering in June that raised $4 billion. It was always seen as the most likely buyer for the brands after GSK announced plans in April for their disposal.
Lucozade and Ribena are well-loved in Britain but lack global reach, especially in the emerging markets that are now becoming the focus of the drugmaker's consumer health business.
For Suntory, however, they offer a growth opportunity to counter sluggish demand at home. Suntory bought the Orangina Schweppes drinks brand for more than $3 billion in 2009.
Introduced in 1927 and 1937 respectively, Lucozade and Ribena have annual sales of just over 500 million pounds a year. That puts the transaction on a multiple of 2.7 times revenue, which is at the high end of recent soft drinks deals.
GSK said it expected the sale to be completed by the end of the year, subject to regulatory approvals. It will yield net proceeds of around 1.3 billion pounds, after tax, fees and costs, that will be used to reduce debt and for general corporate purposes.
The net gain will be excluded from core operating profit and earnings per share in 2013, it added.
JP Morgan and Greenhill acted for GSK on the disposal.