Quaker and Snapple Merger

Project 1 – Chapter 5

Nick Rumpf

Block 4 A/C

Quaker and Snapple merged in 1994 for 2 billion dollars. Stock market analysts often say Quaker “payed 1 billion too much for Snapple” It was Quaker’s largest acquisition, ever. Quaker makes an average six billion dollars in annual sales. Quaker owned Gatorade, a popular drink and did very successful, so they thought they could do the same with Snapple. They hoped that it would make Snapple bigger so they could compete with the larger companies. Quaker wanted to get Snapple in every grocery store in the US, which was part of the problem. Snapple’s success was based on clever marketing and niche consumption. They usually made most of their sales to smaller stores, such as convenience stores, gas stations, etc. Another problem they had was during the beginning of the merger, CokeCo, and PepsiCo made Snapple-like drinks to compete with Snapple.

In just 27 months, Quaker sold Snapple to a holding company for a mere 300 million dollars. Quaker lost 1.6 billion dollars every day that they owned it. Many executives were than fired, and Quakers CEO, William Smithburg was deeply impacted. Quakers stock dropped $7.375, or 10 percent. Snapple’s shares dropped 50 cents, to $13.75. Snapple had a loss of 200 million dollars from this merger. Although Quaker had major losses, they got back 250 million dollars in capital gain taxes it paid on prior deals thanks to losses from the Snapple merger.