value investor, Warren Buffet, who is also the single
largest shareholder in the company. Other factors that
could have influenced the pull-out is the high price that
the company proposed and the possible regulatory problems
the takeover would face.
and analysts see the sudden collapse of the bid as a blow
to the efforts of Douglas Daft, the companys new
chief executive, whose earlier strategic moves to bring
the company back on track have been well received by the
board. The company, however, in a prepared statement said
that the board 'expressed its enthusiastic support for
the current strategic course of the company' under the
leadership of Douglas Daft, chairman and chief executive
announcement overturned earlier indications that both
sides had been confident of reaching an agreement. The
pull-out threw the future of Quaker Oats into question,
leaving it no choice but to consider an offer by French
dairy and biscuits group, Danone or return to negotiations
with Cokes rival, PepsiCo, whose earlier offer the
company had rejected.
would have provided Coke with the invaluable Gatorade
brand of sports drink that would have given it a sizeable
lead in the non-carbonated soft drinks market. Pepsi and
Cadbury Schweppes have been aggressively moving into this
insist that the board rejected the deal because the management
was already stretched with the massive restructuring being
carried on in the company to rejuvenate it. Since Mr Daft
became chief executive in February, over 18 per cent of
the companys workforce have been laid off and 23
of the companys 26 division heads replaced. In its
bid to concentrate on running the company without any
distraction, Mr Daft also settled out-of-court a federal
discrimination lawsuit against the company.
members felt that the uncertainties of Quaker Oats' food
business, which grew only 2 per cent last year, would
have created a potentially unwelcome diversion for the
companys management, which has little expertise
outside of beverages.
Coke has resolved
to gain a larger foothold in the non-carbonated beverage
business, aiming to counter Pepsi's many advances in the
category. This was also to counter the flat growth in
the soda market and meet the mounting pressure from investors
demanding better performance.
In 1999, it
bought the rights to Cadbury Schweppes brands like Dr
Pepper in 160 countries, but regulators blocked the deal
in Western Europe and elsewhere.
also tried to buy Orangina from Pernod-Ricard S.A. in
1999, but French regulators blocked the deal.