Quaker Oats acquisition of Snapple was an example of (select all that apply) a. Vertical Merger b. Horizontal Merger c. Quaker Oats Organic Growth d. Quaker Oats Non-Organic Growth e. One of the most successful acquisitions in corporate history Quaker Oats Co. [10 Steps] Case Study Analysis & Solution This still left a considerable chunk of. Together Abroad Quaker Oats only owned Snapple for 27 months, selling it for $300 million after making a $1.7 billion investment in the drinks company. There's an almost infinite number of factors that come into play in an acquisition like this, but the LA Times blamed the disastrous merger on the company's failure to understand Snapple's strengths along with . Kmart, Sears Merge To Create One Giant Failure. Due Diligence and Multinational Companies | Eclipse Legal ... Text. Quaker Oats Co to sell Snapple Beverage Corp drink business to Triarc Companies for $300 million, $1.4 billion less than Quaker paid for Snapple in 1994; analysts say deal leaves Snapple with low . Many have failed because the integration of the acquired company with the parent has been poor. Deals from Hell: M&A Lessons that Rise Above the Ashes - SSRN The motive behind the merger/acquisition of Quaker Oats Company and Snapple Beverage Company: QOC was looking for new products to go along with their . WEINER v. QUAKER OATS CO. | 129 F.3d 310 (1997 ... First, Quaker Oats tried to change the sales strategy for Snapple by using the relationships it had already developed with grocery stores to try to move more Snapple products. Value Creation in Mergers and Acquisitions | ISBInsight Quaker Oats offered $14 in cash for each share of Snapple stock; the merger agreement contemplated the same payment per share. Mergers and Acquisitions - Why Firms Still Overpay for Bad ... And. Snapple's distribution system was originally based on little distributers functioning 100s of 1000s of tiffin counters and food shop. The Quaker Oats Company's $1.4 billion debacle with Snapple only proves that the well-trod merger road has been paved with unrealized synergies and executive hubris, experts in mergers and. - Dynegy's proposed merger with Enron, 2001. PURCHASE OF GATORADE IN 1983<br> 5. One reason for failures in M&A is the misunderstanding of a company's culture and its roots of success. The merger/acquisition of the Snapple into QOC did not go as planned, and failed as a result according to Investopedia "Biggest Merger and Acquisition Disasters" by Marvin Dumon (Dunon, 2014). u d ) if the alliance or acquisition pursued. The Quaker-Snapple deal on the other hand was an all-cash deal. The Quaker Oats Company, founded in 1891<br><br>William D. Smithburg appointment as CEO in 1979<br> 4. Quaker Oats was prominently focused of diversification and growth with a large corporate mentality. After purchasing the drink company for a whopping $1.7 billion in 1994, Quaker continued to lose money until it was forced to sell Snapple off, 27 months later, for a paltry . Subsequent to this announcement, the price of Quaker stock fell $7.375 per share — approximately 10% of the stock's value. BRAND FAILURES<br> 2. Skype, eBay Divorce: What Went Wrong. In what has been described as a classic failure to perform due diligence and one of the worst corporate merger fiascos in history, Quaker went on to lose around $1.6 million for every day that it owned Snapple, until it was sold for . 10 Min read. Identify opportunities for Snapple in 1997 in the hands of its new owner. Take the acquisition of the Snapple brand by Quaker Oats as an example. Quaker Oats management needs to decide what to do in light of these recent events. All the mistakes Quaker Oats made with Snapple can be boiled down to a single thing - a failure to understand the brand. This paper discusses why the hyped-up merger of food giants, Quaker Oats and Snapple Beverages, was doomed to fail from the start. Explain why the merger failed. There's an almost infinite number of factors that come into play in an acquisition like this, but the LA Times blamed the disastrous merger on the company's failure to understand Snapple's strengths along with . Quaker Oats Company and Snapple Beverage Company Failed Merger Quaker Oats acquired Snapple Beverage Company for $1.7 billion in 2001 27 months later Quaker Oats sold Snapple to a holding company for $300 million, a net loss of $1.6 million Management marketing strategy failed them. On the day the merger was announced formally, both the companies registered a fall in share prices. Similarly, the 1994 acquisition of Snapple Beverage Company by Quaker Oats caused an estimated $1.4 billion loss to Quakers in 27 months and the Wall Street estimated that they paid over $1 . Quaker Oats never went in with the intention to understand their new brand and improve it in the way that the brand allowed. No. Quaker oats and Snapple merger failure There was a Decline in sales Snapple failed to make a bigger presence in supermarkets Gatorade and Snapple had unwarranted competition between these 2 brands Negative publicity was provoked due to termination of contracts as firm was loosing revenue Strategy besides failed. The company reportedly lost more than $150 million on Snapple in a two-year period. Had the Snapple acquisition been a mistake? if the alliance or acquisition pursued. In 1994, they acquired Snapple, a quirky fruit-drinks company, for approximately $1.9bn, thus becoming the third largest producer of soft drinks in the United . Wall Street had warned saying that the amount is excessive, to acquire a company. By Richard Gibson Staff Reporter of The Wall Street Journal. - Dynegy's proposed merger with Enron, 2001. - Acquisition of Snapple by Quaker Oats, 1994. Answer: 'Business merger' is not a phrase that tends to fill people with joy. The Quaker Oats Company saw Snapple as an ideal acquisition candidate to grow its diverse but mundane company and enhance its beverage division, which already included the previously acquired company Gatorade (Nutt 17). The merger between Quaker Oats and Snapple is one of the most famous failed mergers of all time. Quaker Oats On November 1, 1994, Quaker Oats acquired Snapple for approximately $1.9 billion, becoming the third largest pro-ducer of soft drinks in the United States. Quaker Oats' effort to administer Snapple in larger measures. - Acquisition program of Tyco International 2002. Each case study of failure is accompanied by one or more comparison cases that vary in some instructive way. In view of the high risk of M&A failure, a large amount of literature attempts to identify . By 1997 snapple's market share slipped to the 3rd place behind lipton and nestea. the liabilities of a company. Why did Quaker Oats and Snapple fail? Quaker Oats failed to foresee the growing competition coming from other industry players, such as Coca Cola and Pepsi, and tried to shift Snapple's sales strategy without realizing that such a move was likely to be a strategic mistake. Until Quaker Oats possessed Snapple, it caused them a loss of $1.6 million on a daily basis. as it had antecedently done with Gatorade. Introduction Abstract Issues Issue #1: Distribution Issue #1: Alternatives and Recommendations Arnold Greenberg retired from Snapple at the time of the acquisition. In desperation, Quaker Oats gave away $40 million worth of Snapple in the summer of 1996, but even that ploy failed to generate sales. - Acquisition of Snapple by Quaker Oats, 1994. At the time of the initial acquisi- The Quaker Oats Company had been founded at the start of the 20th century, and its most famous product, Quaker Oats Cereal, originated in 1877. Two years ago, Juergen Schrempp stood triumphantly on a London stage and pledged that the newly created DaimlerChrysler AG would . Purchased for $1.7 billion in 1994, Snapple appealed to a specific niche market. This was apparent during Quaker Oats' acquisition of the Snapple beverage company in 1994. The deal reduced the interest expense of the combined entity, but left no money on the table to provide Snapple an incentive to integrate successfully with Quaker. On November 2, 1994, Quaker and Snapple announced that Quaker would acquire Snapple in a tender offer and merger transaction for $1.7 billion in cash. Identifying Core Values A substantial part of the reason this merger didn't work out is Quaker Oats failed to understand the essence of the Snapple brand. C) the diligence of employees. While there were other factors that lead to the acquisition not . See other business news; See all news; Share this page; Former retail giants Kmart and Sears announced last Wednesday their intention to merge via a $11 billion buyout of Sears by Kmart, creating the third largest retailer in the United States and the first largest failure, according to Kmart Holding Corp. chairman Edward Lampert. From their 1994 peak, sales declined every year, plunging to $ 440 million in 1997. Complaint at ¶ 34. - Merger of AOL and Time Warner, 2001. Explore Quaker's rationale for the $1.7 billion it spent for Snapple. Quaker Oats and Snapple had two distinctively different mentalities and strategies in place pre-acquisition. Fresh from their success with Gatorade, Quaker Oats wanted to make Snapple drinks just as . 10 Reasons Why Mergers and Acquisitions Fail. Another example of merger gone wrong due to cultural differences is the acquisition of Snapple by Quaker Oats. During this period, Quaker Oats' stock price was at a standstill and the company was being targeted for a takeover (Bruner 230). Within a span of 20 months, Quaker Oats had to sell off Snapple at a loss of about 20%. e) the liabilities of a company. A merger agreement was signed on November 1, 1994, and a tender offer was announced to the public on November 4. However, many of these mergers were unsuccessful. In 1997, the Quaker Oats Company sold Snapple to Triac for $300 million, $1.4 billion less than it paid for the company just three years earlier - an amount that equates to a loss of $1.6 million for each day the company owned Snapple. none of these above are correct. Snapple was sold by Quaker Oats 27 months later for $300 million. Lesson 2: In a merger of equals, it's wise to communicate the leadership plan, as overlapping roles can create dissension, confusion, or unhappiness. if the alliance or acquisition pursued. Quaker Oats On November 1, 1994, Quaker Oats acquired Snapple for approximately $1.9 billion, becoming the third largest pro-ducer of soft drinks in the United States. Generic Electric is a major player in several industries. Failure to ensure both companies share a unified vision is often the cause of disastrous outcomes. July 25, 1996 12:01 am ET. Complaint at Para(s) 34. Even if management motives in acquiring Snapple were self-serving as alleged, Quaker's "failure to disclose management's entrenchment scheme is not actionable under the [F]ederal securities laws." Lewis, 949 F.2d at 651. Quaker Oats turned to Mike Schott, formerly of AriZona Iced Tea and Nantucket Nectars. The motive behind the merger/acquisition of Quaker Oats Company and Snapple Beverage Company: QOC was looking for new products to go along with their . In this case, Quaker Oats was able to recoup $250 million in capital gains taxes it paid on prior deals, thanks to losses from the Snapple acquisition. A principal reason for the failed merger effort between Quaker Oats and Snapple was: the accounts payable. Quaker was not able to repeat its successful merger with Gatorade this time and their . - Mattel's acquisition of The Learning Company, 1999. They went in thinking that their success with Gatorade can be transferred to Snapple. In 1994, emboldened by its popular subsidiary, Gatorade, Quaker Oats purchased Snapple for a price of $1.7 billion to diversify its beverage products.