GlaxoSmithKline near $1.6B drinks-brands sale to Japan's Suntory

GlaxoSmithKline ($GSK) may be on the verge of bidding goodbye to two of its drink brands. Japan's Suntory Beverage & Food is in advanced talks to buy Lucozade and Ribena, the brands GSK put up for sale early this year, for more than £1 billion ($1.6 billion), Reuters reports.

GSK started soliciting bids for the two brands in February as part of its effort to shed lower-performing products. As CEO Andrew Witty disclosed plans to sequester some older products in a new division at GSK--prompting speculation about a spinoff--private equity firms and drinks industry buyers were circling Lucozade and Ribena. Blackstone, Lion Capital and KKR, along with industry buyers AG Barr and Nestlé, were among the rumored bidders. An auction was set to start later this month.

Suntory has been a likely buyer from the start, however, and the Japanese company may announce a deal early next week, rendering the auction moot, Bloomberg sources say.

It would be the latest in a series of selloffs for Glaxo. Last year, the company disposed of a collection of over-the-counter and prescription brands in a series of deals. Australian rights to infection-fighters Valtrex and Amoxil, among others, went to Aspen Global last August, while European rights to Zantac and other consumer drugs sold to Omega Pharma. Prestige Brands snapped up North American rights to 17 OTC meds, including Gaviscon, Tagamet and Ecotrin. All together, the product sales brought in more than $1.4 billion.

And it won't be the last. South Africa's Aspen Pharmacare is negotiating a $700 million deal for two GlaxoSmithKline anti-clotting drugs, Arixtra and Fraxiparine, and a manufacturing plant in France.

That's in the near term. Further down the road could be a couple of bigger divestments. Witty hasn't ruled out spinning off ViiV Healthcare, Glaxo's HIV-focused joint venture with Pfizer ($PFE). Then there's the new division, focusing on established products around the world, including migraine-fighter Imitrex and stomach remedies Tagamet and Zantac. With sales and spinoffs on every pharma analyst's mind, that new division prompted plenty of talk.

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