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Snapple Quaker Triarc Schweppes

Snapple Quaker Triarc Schweppes

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Published by rr79
The essay compared Quaker Oats’ acquisition of Snapple in 1994 with Snapple’s subsequent acquisition by Triarc from Quaker Oats (“Quaker”) in 1997. The objective is to highlight the Value of Control for Snapple - the acquisition by Triarc was successful whereas that by Quaker had failed miserably. The fact that the acquisitions spanned in the same decade and the in similar competitive environment clearly shows that the synergies have been harnessed by one company, but not quite by the other.
The essay compared Quaker Oats’ acquisition of Snapple in 1994 with Snapple’s subsequent acquisition by Triarc from Quaker Oats (“Quaker”) in 1997. The objective is to highlight the Value of Control for Snapple - the acquisition by Triarc was successful whereas that by Quaker had failed miserably. The fact that the acquisitions spanned in the same decade and the in similar competitive environment clearly shows that the synergies have been harnessed by one company, but not quite by the other.

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Published by: rr79 on Dec 24, 2009
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01/29/2013

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Corporate Control, Mergers andAcquisitions
 
P   a  g e
PART A: QUAKER OATS’ ACQUISITION OF SNAPPLE
 BACKGROUND OF THE COMPANIES  ACQUISITION OF SNAPPLE BY QUAKER OATS VALUATION OF SNAPPLE BY QUAKER OATS  ANALYSIS OF THE ACQUISITION 
PART B: TRIARC’S ACQUISITION OF SNAPPLE
 BACKGROUND OF THE COMPANIES  ACQUISITION OF SNAPPLE BY TRIARC VALUATION OF SNAPPLE BY TRIARC  ANALYSIS OF THE ACQUISITION 
PART C: CONCLUSION
CONTRASTING THE DEALS  KEY LEARNINGS 
ANNEXURES
 
P   a  g e
 3 
PART AQUAKER OATS’ ACQUISITION OF SNAPPLE
BACKGROUND OF THE COMPANIES
THE
Q
UAKER 
O
ATS
C
OMPANY
:
Quaker Oats is an American food conglomerate. The story of Quaker Oats’ success is one of a company led by a strong management effectively growing inthe face of increasing competition and economic cycles through internal and inorganic growth.See
Annexure A1
for details about Quaker Oats.
S
NAPPLE
B
EVERAGE
C
ORPORATION
:
Snapple is an American beverage company, known for itsnatural juices and fruit drinks. From a business run part-time by its founding members, Snapplegrew to become one of the leading producers of non-alcoholic drinks in North America within afew decades.
Annexure 1
provides the background of the company. 
ACQUISITION OF SNAPPLE BY QUAKER OATSA.
EASONS
 
FOR 
 
THE
 
ACQUISITION
With an increase in competition, the Snapple stock price had halved, from $60 in 1993 to $30 in1994. This fall in the share price of Snapple was seen by Quaker Oats as an opportunity toincrease its market share in the non-alcoholic beverage market. The acquisition would cement its position as a prominent player in the North American non-alcoholic beverage market. Themarket was growing at a rapid rate. The acquisition of Snapple was considered necessary byQuaker Oats to remain a competitive player in the market. Yet another reason in favor of anacquisition was that Quaker Oats expected to gain operating synergies from buying Snapple.
B.E
XPECTED
 
SYNERGIES
 
FROM
 
THE
 
ACQUISITION
¾
Distribution synergy:
Gatorade, positioned as a mass product, and was sold throughsupermarkets and convenience stores. Snapple products were sold largely through independentretailers, vending locations, and restaurants. Quaker Oats expected to utilize each of thesedistribution channels to bolster the sale of the other product.
¾
Learning curve effects:
With the sales of Gatorade rising from $122 million in 1984 toabout $1.20 billion in 1994 (22% compound annual growth rate), Quaker Oats felt that it coulduse economies of scope from its Gatorade experience to boost sales for Snapple.
¾
Common activities:
The Quaker Oat management believed that there were significantsynergies to be achieved in common areas such as R&D, manufacturing and marketing.

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