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QUAKER OATS COMMITS "CEREAL MURDER" AND PURCHASES SNAPPLE
Published November 3, 1994
"In a deal that will create the nation's third-largest soft- drink company," Quaker Oats said Wednesday it is paying $1.7B in cash to acquire Snapple Beverages. Quaker Oats Chair-CEO William Smithburg characterized the merger as an "offensive move to enhance" Quaker's portfolio of products. Securites Corp.'s John Curti: "It's no secret that Quaker was being stalked by both Coca-Cola and PepsiCo. I think there was a defensive strategy here" (Ronald Yates, CHICAGO TRIBUNE, 11/3). By purchasing Snapple, Quaker -- parent company of Gatorade -- plans to strengthen Gatorade and Snapple sales in markets where they have been traditionally weak. Quaker spokesperson Patti Jo Sinopoli: "We plan on taking Snapple where Gatorade has been and taking Gatorade where Snapple has been" (Lisa Respers, L.A. TIMES, 11/3). The Quaker Oats offer was announced as Snapple reported that its third-quarter earnings had "plummeted" 74% to $7M in the third quarter (Martin Peers, N.Y. POST, 11/3). NBR's Nancy Seifert called the deal a "cereal murder" for investors, as Quaker stock dropped 7 3/4 to 67 1/8. NBR's Diane Eastabrook reports a "fierce" iced-tea war should follow by next summer (PBS, 11/2).