Mba 560 Merger and Acquisition

Merger and Acquisition not always a marriage made in heaven.

Louis Otavio

The 1994 $1.7 billion purchased of Snapple Beverage Corporation by Quaker Oats Company not only proved to be a financial disaster for Quaker but it was an evident that not all mergers and acquisitions were marriages made in heaven for the firms involved not matter how expedient and financial worthy the deal happens to be. Snapple Beverage Corporation which was founded in 1972 had already stable market segment and by 1993 the company has captured 20 per cent of market share in the supermarket retail sector with the company’s beverages being found in what Jackson (2008, p.47) referred to as “….hundreds of thousands of mom-and-pop stores, lunch counters and delis.”

Quaker Oats Company had by then a comfortable market share with its popular beverage brand Gatorade. The management of the company thought that it was the right idea to acquire Snapple so that the company can market Snapple drinks through its distribution channel. However, the decision proved to be disastrous as Quaker Oats Company lost $100 million dollars in the first three years (Jackson, 2008). The major problem was that Quaker Oats used a different distribution and marketing approach which was not in alignment with Snapple’s methodology of distributing and marketing their products through network of small independent vendors and Quaker did not provide more discounts to former distributors of Snapple products that made them sought for better offers from other beverage companies like Pepsi. Some of the former customers were also disgruntled by the acquisition process and resented buying Snapple’s products under Quaker’s ownership.

In 1997 Quaker sold Snapple for $300 million to a New York-based firm Triac Company that made the company later profitable. In 2000, Triac sold Snapple to Cadbury Schweppes for $1.4 billion dollars and at the current moment the Snapple is up for sale (Jackson, 2008). The acquisition and resale of...