Quaker Oats - Snapple Acquisition Analysis

2533 Words Feb 23rd, 2013 11 Pages
The Pursuit of Synergy:
Quaker Oats-Snapple Acquisition

Professor Sherif A. Ebrahim
Corporate Strategy, Spring 2012
May 1, 2012

Pauline Guittard
Linn Gustafsson
T.J. Henry Jr.
Sevinc Ulu
Brittany Williams

Many successful businessmen and women have concluded that the most successful acquirers are also the most disciplined. In order to secure a lucrative and profitable acquisition all strategic alternatives ought to have been considered and prudently explored. Furthermore, a clear operating strategy post-acquisition is something that must be in place pre- acquisition. Despite this notion, many acquisitions seem to be driven by an urge to generate synergy, without any specific operating strategies in place.
For example, Quaker Oats
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Quaker Oats Reasoning: Why Acquire Snapple
Leading up to 1993-1994, Quaker Oats wished to expand their successful Gatorade section into one large beverage division. The creation of a new beverage division would have an instant benefit for Quaker Oats making them the third largest beverage company in the US. Furthermore, high confidence was expressed by CEO Mr. Smithburg, who had managed to increase Quaker Oats’ net value from $220 million to $3 billion by acquiring Gatorade. Smithburg considered himself an expert regarding acquisitions and confidently stated “we have an excellent sales and marketing team here at Gatorade. We believe we do know how to advance Snapple as well as Gatorade to the next level.” Finally, Quaker Oats believed it could advance Snapple in the same way as Gatorade and utilize perceived synergies in beverage distribution to take the Snapple brand global. For those reasons, Quaker Oats formed the aspiring beverage division composed of Gatorade and Snapple in 1994.

Bias Trap: What Quaker Oats Did Not Consider Synergy, commonly defined as “the ability of two or more units or companies to generate greater value working together than they could working apart”, is a lucrative concept with an implementation process far more complex than its definition. Michael Goold and
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