Suntory buys Frucor

Energy drinks still seem to be all the rage. Small wonder that Groupe Danone has received a number of final bids from trade buyers for its Frucor unit, maker of V energy drinks. In the end it was Japanese beverage company Suntory which clinched the deal. Danone, which is streamlining its portfolio to focus on healthier products such as mineral and spring water, on 23 October 2008 sold Frucor for an "amount over EUR 600 million" or around AUD 1.2 billion, at the top end of analysts’ expectations.

Based on Frucor’s earnings of just over NZD 100 million the price represents a multiple of around 13 times earnings before interest, tax, depreciation and amortization.

Privately-owned Suntory, which has interests in beer, soft drinks and spirits, edged out rival bidders. Interested parties included Coca-Cola Amatil, Japanese brewer Kirin, Singapore’s Fraser & Neave and U.S.-based PepsiCo, people familiar with the situation told local media.

Coca-Cola Amatil, which would have liked to buy Frucor’s V energy drink to fill a key hole in its drinks portfolio, has lodged an offer but it fell short of rival bids.

"We put an indicative bid in (for Frucor) and have been told formally now there are others who have been prepared to pay more than that," Coca-Cola Amatil’s Chief Executive Terry Davis was quoted as saying.

With Danone having got out of Frucor, Schweppes Australia may also decide to put itself up for sale. Rumour has it that the Japanese brewers will also likely take a keen interest in the Schweppes Australia sale.

Suntory and Kirin, which owns Australian drinks company National Foods, would be able to leverage synergies in any bid for Schweppes.

Japanese brewers are keen to expand abroad to offset stagnating domestic sales, and have built up considerable war chests to pursue acquisitions.