Vimto Owner Mulls Mouthful Of GSK's Ribena

The owner of the Vimto soft drink brand is mulling a joint bid with private equity groups for Lucozade and Ribena that would transform it into one of Britain's biggest beverages groups.

Sky News understands that Nichols is being encouraged by GlaxoSmithKline (LSE: GSK.L - news) (GSK), which owns the two brands, to join forces with buyout firms for a bid.

Nichols, whose portfolio also includes Panda and the UK distribution rights to Sunkist, is undecided about whether to pursue an offer for the GSK assets, which would represent by far the largest corporate deal in its history.

In a statement issued to Sky News, Nichols said: "We are monitoring the sale of GSK’s drinks brands with interest but we understand that the process is in its early stage’.

A host of other drinks groups, including Suntory, the Japanese giant, and AG Barr, which owns Irn-Bru, are examining offers.

Their stiffest competition will come from private equity groups, with Blackstone (NYSE: BX - news) and Lion Capital among those with an extensive track record of investing in the sector.

In 2005, they acquired the European beverages division of Cadbury-Schweppes, selling it four years later to Suntory for roughly £1.5bn.

Other buyout firms, such as Bain Capital, CVC Capital Partners, KKR and Onex, a Canadian fund, are among those also considering bids.

The outcome of the auction of Lucozade and Ribena will go some way towards reshaping the UK soft drinks market.

Britvic (Other OTC: BTVCF - news) and AG Barr, which makes Irn-Bru, recently saw a proposed merger approved by competition authorities, but it has since been abandoned because of the shifting economics of the original deal.

GSK, which is reeling from allegations of systemic bribery within parts of its business in China, said this week that it expected to conclude a sale of Lucozade and Ribena by the end of the year.