Sky News reported this morning that private equity firms Lion Capital and Blackstone had appointed bankers Rothschild to advise on a potential £1bn+ ($1.52bn) bid for the two GSK brands.
A Lion Capital spokeswoman told this BeverageDaily.com: “We are aware of the story. Lion Capital has a policy of not commenting on market or media-led speculation.”
Julian Wild, corporate finance partner at law firm Rollits, told BeverageDaily.com today that the rumors did not surprise him, given the firms’ experience in the food and beverage sphere.
‘£1bn looks like a very big figure’
In 2005 Lion and Blackstone teamed-up to buy Cadbury-Schweppes’ European beverages division, then sold it to Suntory in 2009 for circa. £1.5bn.
On whether £1bn+ represented fair value, Wild said: “I see that being rumoured, but my view is that those sort of numbers are always aspirational, and it looks like a very big figure to me. But they’re two very valuable brands, and I’m sure that there is going to be plenty of interest.”
In April BeverageDaily.com reported comments from another M&A specialist, Shaun Browne from McQueen, who said he thought the GSK businesses were more likely find a private equity buyer, as top multinational trade buyers would be turned off by brands with a predominantly UK footprint.
Around 80% of Lucozade sales occur in the UK.
Asked about these comments, Wild said: “I think he’s probably right about that. Multinational players will always look at the global potential of particular brands.
“And if they see particular brands as being essentially UK-only or largely UK, then that will inevitably be something of a ‘put off’ for some players.”
Far Eastern foothold in UK market?
But Wild added that he believed there were “plenty of players, particularly in the Far East, who would view them [Lucozade and Ribena] as important brands to establish a bridgehead in the UK.”
Did Wild regard Orangina-owner Suntory Holdings, which in mid-April was rumored to have approached bankers with a view to bidding for the GSK brands, as one of these players?
“Exactly right – they are big brands in the UK, and they would be a very important cornerstone to developing a business in the UK,” Wild said.
“Private equity sometimes takes a different view, and wouldn’t view these necessarily as global brands, but would be more interested in the cash generation and growth potential of these particular businesses in their current markets,” he added.
Blackstone was unavailable for comment.