Lion sells Pepsi interest

Lion Nathan is selling its Australian Pepsi franchise back to the people who sold it 10 years ago.

Cadbury Schweppes Australia will buy Lion's 83.5 per cent interest as well as Pepsico's 17.5 per cent for an undisclosed sum.

Lion bought the Australian franchise from Cadbury Schweppes in 1990 and tried to sell it back to the British food and beverage company in 1997 but failed.

For much of the past decade, the franchise has been a drag on Lion's profits, with Pepsi being overshadowed by its fierce rival Coca-Cola in both markets. Two years ago Lion said the combined value of the New Zealand and Australian franchises had a book value of $143 million. Last year the New Zealand operation was sold.

Yesterday Lion chief executive Gordon Cairns said the sale had brought an end to the company's sale of its non-core assets disposal programme.

"Lion is happy with the outcome of the sale process and we will not be taking any writedowns as a result of this transaction."

Completion of the sale is scheduled for September 30.