Suntory in talks to buy Orangina
If Blackstone and Lion Capital manage to clinch a deal with Japan’s Suntory, they will be crying all the way to the bank. Who would have thought that they would be so lucky to find a buyer willing to take a company off their hands in the middle of an economic crisis? Blackstone and Lion Capital paid USD 2.6 billion for Cadbury-Schweppes’ European beverages division (“Orangina”), which in 2005 was the number three player in the European soft drink market with 2500 employees, a sales volumes of 1.8 billion litres and a turnover of almost EUR 960 million.
The fizzy orange drink Orangina, which – unlike its rival Fanta – contains some pulp, is sold in an iconic bulby 0.25 litre bottle. Western Europe contributes 70 percent to its turnover. In France, where the company has been headquartered since 1961, the soft drink is extremely popular. So popular that The Coca-Cola Company wanted to buy it but was prevented from doing so by the French Government in the late 1990s.
Under Blackstone and Lion Capital, Orangina’s market share has not improved. Nor have the company’s financials. Blackstone and Lion Capital spent EUR 300 million each on Orangina, with the rest financed by debt.
If completed, the deal would generate a return of more than twice their initial investment for Lion and Blackstone.
The current rumoured EUR 2.6 billion price tag values Orangina at about 11 to 12 times EBITDA. Not cheap. But if acquired by Suntory, it would help Suntory gain traction in the global market, adding to its EUR 600 million purchase earlier this year of Groupe Danone’s Australian and New Zealand drinks business Frucor.
Suntory bottles and distributes PepsiCo’s products in Japan.
Market researchers at Canadean say that Suntory ranks tenth among global soft drink companies. If Suntory were to buy Orangina, it would move up two places in the ranking and gain access to Orangina’s distribution network in Europe.
Excluded from the deal are the German and Austrian markets. It was Germany’s Krombacher Brewery that bought the trademark and distribution rights for Orangina in Germany and Austria from Blackstone and Lion Capital in 2006 for a rumoured lump sum of EUR 20 million plus annual fees. German media reported that Krombacher brewery holds the Orangina trademark rights in these two markets in perpetuity.
