Suntory bids for Schweppes

City A.M. Reporter
JAPANESE brewer Suntory has made a binding bid for soft drinks maker Orangina Schweppes, its private equity owners said, in a sign buy-out houses may find it easier to exit investments.<br /><br />Suntory will pay &euro;2.6bn (&pound;2.4bn) for Orangina, two sources familiar with the situation said, allowing Blackstone Group and Lion Capital to double their money over the three years they owned the group.<br /><br />Orangina &ndash; whose brands include Snapple and Oasis &ndash; is the second largest European producer in the still soft drinks market. Blackstone and Lion bought the eponymous producer of Orangina and Schweppes for $2.6bn (&pound;1.59bn) in 2006, investing roughly $600m of their own capital, before the debt markets slammed shut and buy-outs ground to a halt.<br /><br />The private equity firms recapitalised the business in April 2007 with a &euro;1.8bn loan and approached the market six months later for an additional &euro;192m add-on.<br />The deal is expected to complete around the end of October, the sources said.<br /><br />As Kraft&rsquo;s pursuit of chocolate maker Cadbury with a view to creating the world&rsquo;s largest confectionary group demonstrates, appetite for recession-resilient consumer businesses is growing. While dealmaking remains at low levels, private equity firms are finding it possible to raise the financing to do deals for producers of everyday consumer items.<br /><br />An Orangina deal would be a high spot for the European private equity industry, but would also indicate a desire by Japanese drinks producers to expand overseas.<br />