Lucozade, Ribena buyout: GSK’s operating margin to decline by 4%

GlaxoSmithKline Consumer Nigeria Plc (GSK Nigeria) Monday said the full financial impact of the proposed buyout of its Lucozade and Ribena brands  which will be phased in over 2014 - 2015, is expected to lead to a small decline in its  overall long term operating margin by some three to four per cent.

 This is contained in a Statement by the firm to the Nigerian Stock Exchange (NSE). Though, GSK Nigeria said that there is no change to its 2013 financial guidance.

 According to GSK Nigeria, it will continue to bottle and distribute nutritional drinks Lucozade and Ribena for Suntory Beverage & Food Ltd (SBF), the Japanese consumer goods company, following the completion of the deal.

 GSK Nigeria said the two brands accounted for over half of its sales and operating profit in 2012. GSK Nigeria said its sales of these brands grew 26 per cent.

This is coming on the heels of the announcement from GlaxoSmithKline that SBF Japan is expected to buy its Lucozade and Ribena brands for 1.35 billion pounds ($2.1 billion) to help it expand into new markets.

According to reports, the deal had been expected since people close to the process said last week that Suntory - best known for beer and Yamazaki whisky - was in advanced talks on a purchase that would pre-empt an auction of the British drinks.

SBF is Japan's second-largest drinks maker by sales after the local arm of Coca-Cola Co has plenty of cash after raising $4 billion in a stock market flotation in June. It was always seen as the most likely buyer for the brands after GSK announced plans for their disposal in April.

 Reports further affirmed that the energy and blackcurrant drinks are popular in Britain but from GSK's point of view lack global reach, especially in the big emerging markets that are becoming the focus of the British drugmaker's consumer health business.

The deal is still subject to regulatory approval in Europe and it’s expected to be completed by the end of the year.