Earlier this year, after a strategic review of the consumer health care market with a particular focus on emerging markets, GlaxoSmithKline (NYSE: GSK ) determined it would divest itself of two nutritional drink brands: Lucozade and Ribena.
Today, Glaxo announced that it has reached an agreement to sell the two nutritional drink brands to Japan-based Suntory Beverage & Food for $2.1 billion in an all-cash deal.
According to Glaxo, net proceeds from the transaction will be approximately $2 billion and will be used to reduce debt and for general corporate purposes. Net profit realized from the transaction will not be added to earnings per share or operating profit in 2013, the company said.
In addition to acquiring global rights for the Lucozade and Ribena brands, Glaxo said Suntory will also acquire its Coleford manufacturing facility in England. Employees at the Coleford site, and others involved with the development and commercialization of the two brands, will transfer to Suntory. In Nigeria, GSK will continue to manufacture and distribute Lucozade and Ribena under license from Suntory.
Glaxo chief strategy officer David Redfern said in a statement, "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."
Ribena's blackcurrant drink dates back to 1938 and was distributed freely during World War II as a source of Vitamin C. Lucozade, originally known as Glucozade, was launched in 1927 as an aid to recovery before becoming popular as a sports drink.
Osaka-based Suntory is known for producing Japan's first whiskey. It runs a series of subsidiaries whose concerns include food, supplements, flowers, and fitness.
The deal is subject to customary closing conditions and is expected to be completed by year's end.
-- Material from The Associated Press was used in this report.