Blackstone, Lion Get $3.85B Orangina Bid

Japanese brewer Suntory has made a binding bid for soft drinks maker Orangina Schweppes, its private equity owners said, in a sign buyout shops may find it easier to exit investments.

Suntory will pay €2.6 billion ($3.85 billion) 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.

Blackstone Group and Lion Capital declined to comment on price.

Orangina — whose cocktail of brands also includes Snapple, Oasis and La Casera — is the second largest European producer in the still soft drinks market, the private equity firms said in a statement.

Blackstone Group and Lion Capital bought the eponymous producer of Orangina and Schweppes for $2.6 billion in 2006, investing roughly $600 million of their own capital, before the debt markets slammed shut and LBOs ground to a halt.

The buyout shops recapitalized the business in April 2007 with a €1.8 billion loan and approached the market six months later for an additional €192 million add-on, according to Thomson Reuters LPC.

The deal is expected to complete around the end of October, the sources said.

Rothschild, JPMorgan, Citigroup, Blackstone Corporate Advisory, RBS and Nomura acted as financial advisers, the buyout shops said.

The secondary price on Orangina’s senior loans moved closer to face value, following Suntory’s approach, as investors looked forward to the prospect of repayment at par.

As Kraft’s pursuit of chocolate maker Cadbury with a view to creating the world’s largest confectionary group demonstrates, appetite for recession-resilient consumer businesses is growing.

While dealmaking remains at low levels, buyout firms are finding it possible to raise the financing to do deals for producers of everyday consumer items.

CVC has secured loans for around half of its $2 billion offer for the central and Eastern European brewing Assets of AB InBev, while Montagu Private Equity‘s sale of its sausage casing business Kalle for a more modest €212.5 million showed profitable exits remain possible.

An Orangina deal would be a high spot for the industry. However, Blackstone Group and Lion Capital said social, regulatory and legal steps will need to be completed before they decide whether or not to accept the bid.

(By Simon Meads, with additional reporting by Tessa Walsh, Quentin Webb, and Megan Davies.)