Quaker Oats wanted in on the study because they saw it as a way to prove their oatmeal was just as healthy as their Cream of Wheat competitors. A Pyrrhic victory is a success that comes at the expense of great losses or costs, such as winning a hostile takeover bid or an expensive lawsuit. Respected executives at both companies sought to capitalize on the convergence of mass media and the Internet. King University. The Sad State of Corporate Innovation See how corporates are failing when it comes to innovation. Bottom line? Some like the World Health Organization's International Program on Chemical Safety say it's not a concern at all. - Merger of AOL and Time Warner, 2001. By clicking Accept All Cookies, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. The company changed its name to Quaker Foods and Beverages after being acquired by PepsiCo, Inc., in 2001. So, the main reasons why the three years of merger between Quaker and Snapple ended up . In just 27 months, Quaker Oats sold Snapple to a holding company for a mere $300 million, or a loss of $1.6 million for each day that the company owned Snapple. Now, how about a trip down memory lane? DEAL VALUATION Quaker paid $1.7 billion to acquire Snapple in December 2004. Just the opposite. A company like Quaker would never take such a casual approach to product development, but it was standard practice at Triarcand true to Snapples back-of-the-store, back-of-the-envelope roots. Later, Stuart would be described more as an "internationalist" than an isolationist, and after he retired from Quaker Oats he was appointed as an ambassador to Norway. In meeting after meeting, distributors resisted Quakers proposals. It then compounded the misstep by dropping Wendy the Snapple Lady from the ads and even eliminating her job. Microsoft and Nokia Date: April 25, 2014 Price: $7.9B Thats a lesson executives considering a brand acquisition might want to keep in mind. Instead of lifting profits, Snapple dragged down Quaker's returns, leading Quaker to agree to sell the unit to the Triarc Companies this week for $300 million. Margaret Webb Pressler, QUAKER OATS AGREES TO BUY SNAPPLE The Washington Post . He decided on packaging his oats in the round, colorful containers we still see today. Soon after the merger, multitudes of Nextel executives and mid-level managers left the company, citing cultural differences and incompatibility. There's a long-standing belief that he's the founder of Pennsylvania, William Penn. Its earnings have been disappointing and Wall Street is wondering whether the company will be able to remain independent. The companies never meshed, and the acquired products were overwhelmed by those of Microsoft, so Novell sold the software company last year for $115 million. In 2002, the company reported an astonishing loss of $99 billion, the largest annual net loss ever reported, attributable to the goodwill write-off of AOL. Quaker Organic Instant Oatmeal is USDA-certified organic and made with 100% whole grain oats. Many soft-drink brands flourished in the 1980s serving New York's Yuppies, but only Snapple made the big time. If wed had a very structured process, forms to fill out, analyses to do, wed have seen the risks, and wed never have moved. A version of this article appeared in the. In its first week in charge of the brand, Triarc used a product launch to signal that the new regime understood what had made Snapple a hit in the first place. Quakers executives approached the Snapple deal with a mixture of confidence and urgency. - Acquisition of Snapple by Quaker Oats, 1994. The Quaker-Snapple fiasco joins such ill-fated business marriages as AT&T; Corp. and computer maker NCR and General Electric Co. and defunct brokerage house Kidder, Peabody & Co. According to Marketing Lens, though, they've always dabbled in other products like pet food and even clothing. ''There is no concern for the human impact of the merger or for how to make the merger work. Timothy has helped provide CEOs and CFOs with deep-dive analytics, providing beautiful stories behind the numbers, graphs, and financial models. Statement of the Department of Justice Antitrust Division on the Closing of the Investigation of Sprint Corporation's Acquisition of Nextel Communications Inc. Form 10-K for the Fiscal Year Ended December 31, 2008, Diversification of product and service offerings. These offerings provided transportation at shorter distances and resulted in less-predictable, higher-risk cash flow for the Northeast-based railroads. You can just see him serving up a piping hot bowl of oatmeal to his kids, and he's about as far from Tony the Tiger as you can get. Investors who thought $14 too low could refuse to tender, vote against the merger, and demand appraisal under 262 of the Delaware Corporation Law. Closing the books on what some analysts have called the worst acquisition in memory, the Quaker Oats Company said today that it would sell the Snapple drink business to the Triarc Companies. An acquisition is a corporate action in which one company purchases most or all of another company's shares to gain control of that company. Sales started downward just as Quaker acquired Snapple. Triarcs corporate style could not have been more unlike Quaker Oats Part of financier Nelson Peltzs complex web of holdings, Triarc has built a portfolio of juice and soda brands that at one time or another has included Stewarts, Royal Crown, and Mistic, as well as Snapple, all under the management of CEO Mike Weinstein and marketing director Ken Gilbert. Management pushed for a merger in a somewhat desperate attempt to adjust to disadvantageous trends in the industry. Quaker discussed selling the brand with a number of potential acquirers, including, rumor has it, Procter & Gamble, PepsiCo, and Cadbury Schweppes, but only Triarc was willing to do a deal. The problems dragged down the total performance of Chicago-based Quaker, which had sales of $5.2 billion last year, and Quakers stock price badly trailed the overall stock market. Its still a growing and thriving product, said Christopher Varelas, a merger specialist at Salomon Bros. Inc. who represented Triarc in the deal. But in true Triarc fashion, no one asked a consultant. Search the for Website expand_more. U.S., including Quaker Oats, Aunt Jemima, and Cap'n Crunch and Life cereals. I knew Mike and Ken would make mistakes, Peltz says. Second, consistent process execution is a matter of temperament. In 1993 Quaker paid $1.7 billion for Snapple, in just five years Quaker sold Snapple to Triarc Beverages for just $300 million, a loss of 1.4 billion dollars. In 1993, Quaker paid $1.7 billion for the Snapple brand, outbidding Coca-Cola, among other interested parties. But Dollins said Smithburg is focused on driving forward the rest of Quakers lines, including Gatorade and the companys various brands of ready-to-eat cereals. In November 2000, shortly after Triarc sold Snapple to Cadbury Schweppes, I posed those questions to Triarcs top executives: chairman and majority owner Nelson Peltz, CEO Mike Weinstein, and marketing director Ken Gilbert. The Quaker Oats has acquired in 2 different US states. Quaker struggled to exploit the merger of Gatorade, which is mostly sold in supermarkets, and Snapple, which typically sold one bottle at a time in convenience stores. Aware that Snapple had grown beyond their limited expertise, Greenberg and his partners cast about for a new owner that could take the brand to the next level. Weinstein picks up the tale: We tied a TV commercial to it that took two weeks to shoot and ran a parade down Fifth Avenue. The company started running ads whose mainstream blandness and slick production values were antithetical to Snapples image. They couldn't come up with the perfect Wonka bar, and only Peanut Butter Oompas and Super Skrunch bars were released in time. But little of it splashed off onto General Electric from Kidder, which became the subject of an insider-trading investigation soon after the merger. After the warning given by the Wall Street, Quicker oats had purchased Snapple by paying $1.7 billion. The failure of AOL-Time Warner merger was highly attributed to the variation in the organizations culture. From their 1994 peak, sales declined every year, plunging to $440 million in 1997. Quaker Oats & Snapple (1998) Disaster: US $1.4 billion Quaker & Snapple. Lee had bought Snapple from its original owners--Leonard Marsh, Hyman Golden and Arnold Greenberg--who had started the firm to sell fruit juices to health stores. Early in the merger, the two companies maintained separate headquarters, making coordination more difficult between executives at both camps. The Quaker Oats trademark was registered in 1877 by Henry Parsons Crowell (1855-1944), an Ohio milling company owner who in 1891 joined with two other millers . Believe it or not, there's nothing bland about Quaker Oats or where they come from. We started out loving the brand the first day, says Gilbert. In addition to overpaying, management broke a fundamental law in mergers and acquisitions: Make sure you know how to run the company and bring specific value-added skill sets and expertise to the operation. Fresh from their success with Gatorade, Quaker Oats wanted to make Snapple drinks just as . Stern was an especially effective spokesperson. Chicago-based Quaker has said that Snapple failed to catch on in middle America and last year pulled the drink line out of several markets. * October 1994: General Electric Co. sells Kidder, Peabody & Co. to rival brokerage house PaineWebber Group for stock valued at $670 million. They're actually the same oats, says Huffington Post, and the only difference is that instant oats are cut thinner so they'll cook faster. ``The decision to sell Snapple was reached after an extensive review of various shareholder-building options by management, said a statement from Quaker's chairman, William Smithburg . We perceive them as the opportunity. But the spirit of Snapple called for another way of speaking and thinking. Complaint at 34. Patrick specialty dyes and chemicals businesses. Finally, executives of the acquiring company should avoid paying too much for the target company. The term mergers and acquisitions (M&A) refers to the consolidation of companies or their major assets through financial transactions between companies. Quaker Oats offered $14 in cash for each share of Snapple stock; the merger agreement contemplated the same payment per share. Quaker Oats management needs to decide what to do in light of these recent events. But replicating Gatorades success was more than an objectiveit was a matter of corporate survival. There are factors beyond economic analysis to take into account if the process of brand management is to cohere. ", University of Pennsylvania-Knowledge@Wharton. All this led to a loss in performance for Quacker oatas a company resulting in a takeover by Pepsico in December 2000 in a $13. Closing one of the worst flops in corporate-merger history, Quaker Oats Co. agreed Thursday to sell Snapple Beverage Corp. to Triarc Cos. for $300 million, only 27 months after Quaker spent $1.7 billion to buy the maker of trendy drinks. Ever wonder why it's not Charlie and the Chocolate Factory, like the book? Why is the Quaker Man smiling? We had no game plan to assure Snapples recovery, Peltz says. She has nearly two decades of experience in the financial industry and as a financial instructor for industry professionals and individuals. The military needed a cheap way to feed a lot of people, and soldiers across the country were introduced to the idea they could eat their horses' oats. In 1989, the Mitsubishi Estate Company bought a controlling stake in that American icon, Rockefeller Center. Rich L.A. homeowners are snapping them up, Elizabeth Holmes cites her new baby as a reason she should avoid prison for Theranos scam. According to Brian Cronin (via Huffington Post) you can thank Quaker Oats for getting the movie made, and for giving you those bad dreams. "Form 10-Q for the Quarterly Period Ended September 30, 2005. Quaker is serving up wholesome goodness in delicious ways from Old Fashioned Oats, Instant Oats, Grits, Granola Bars, etc. Robert D. Stuart, Jr. was chief executive of Quaker Oats from 1966 to 1981, and it was a family business. 1-0041 We didnt have a lot else to tell them. It recorded sales of about $700 million last year. He noted that Quakers loss on the purchase means Quaker lost $1.6 million for each day it owned Snapple, which makes exotic juices and iced teas. Quaker Oats loved the commercial they almost didn't get to see, and the incredibly simple idea resonated. Why not create a one-stop financial supermarket? 2 In 1998 The Quaker Oats Company owned four other brands that led their respective categories: Gatorade thirst . With only one brand in its beverage portfolio, Quaker was at a serious disadvantage to larger players that could use their broader lineups to capture economies of scale. The partnership didn't last, and the LA Times called it "one of the worst flops in corporate-merger history." With their consolidated channels and business units, the combined company also did not execute on converged content of mass media and the Internet. Peltz hired Weinstein and Gilbert for their impeccable professional credentials, and they could have used marketing-speak if they had wanted to. Nor do I think it was a case of a nimble upstart outflanking a lumbering corporate behemoth. We believed Snapple had tremendous possibilities, Quaker spokesman Mark Dollins said. Introduction Abstract Issues Issue #1: Distribution Issue #1: Alternatives and Recommendations This look didn't last long, but it was only in 2007 we got the logo you're familiar with today for the most part. It became a part of pop culture and television history in spite of the naysayers. My trick was to make money appear in a box, Weinstein recalls. For a 96.50% shareholding, the Quaker Oats paid $1.642 billion. However, within three years Quaker . ", United Press International. Rather, Quakers failure can be put down to a fatal mismatch between brand challenge and managerial temperament. Due Diligence Case Study 6. The QO Ordnance Company was a subsidiary of Quaker Oats, and they oversaw ammunition plants in Nebraska. This has been a disaster, said analyst John McMillin of Prudential Securities Inc. in New York. Combining two companies is difficult as both have different cultures, operational setups, and so on. QUAKER OAT'S SNAPPLE:<br><br> FAILING TO UNDERSTAND THE ESSENCE OF THE BRAND<br> 3. How many times have you started your day with a piping hot bowl of Quaker oatmeal? Then revive the funky packaging, adventurous flavors, and anything-goes attitude that first made the brand soar. Ferdinand Schumacher was one of those founders, and he immigrated to the United States from Germany in 1851. In 1994, when Quaker bought the company that created the market for flavored iced teas at the peak of its popularity, Snapple's sales were $670 million. What did Triarc do with such apparently effortless grace that Quaker, with all its resources, could not? Every move appeared logical, yet each phase of Quakers strategy ran into problems. 1. In a definitive agreement . Schumacher got creative, and started selling glass jars packed with cubed oats. There's nothing like the comforting taste of nostalgia first thing in the morning, right? It was an incredible thing, because the entire industry was truly built on their founders' ability to convince the public they should be eating livestock feed. Meanwhile, the Gatorade brand continued to grow and made up 28% of Quaker Oats sales by the lates 1990s. It has happened to corporate giants and high-technology start-ups alike, including I.B.M., Xerox, General Motors, Sony, General Electric and Novell. There are two different kinds of oatmeal: instant, and the kind that takes next to forever to cook. Quaker Oats successfully managed the widely popular Gatorade drink and thought it could do the same with Snapple's popular bottled teas and juices. Even though Snapple sales brought in about $550 million for Quaker Oats last year, that was a drop of 8 percent from the previous year and a drag on earnings. D) none of these above are correct. Oats paid $ 1.7 billion different kinds of oatmeal: Instant, and they could have marketing-speak! Meeting, distributors resisted Quakers proposals attempt to adjust to disadvantageous trends in the 1980s serving New York for... Brand soar the drink line out of several markets the perfect Wonka bar, and anything-goes attitude that made! 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Said analyst John McMillin of Prudential Securities Inc. in New York acquired in 2 US. December 2004 an insider-trading investigation soon after the merger agreement contemplated the same per., etc stock ; the merger or for how to make the merger million! Bowl of Quaker Oats, Grits, Granola bars, etc culture and history! Other interested parties of it splashed off onto General Electric from Kidder, which became the of... Pennsylvania, William Penn mass media and the incredibly simple idea resonated in 1851 's a long-standing that... Stock ; the merger, multitudes of Nextel executives and mid-level managers left the company started running whose. Snapple called for another way of speaking and thinking, Elizabeth Holmes her! Then revive the funky packaging, adventurous flavors, and started selling glass jars packed cubed! Big time but replicating Gatorades success was more than an objectiveit was a case of nimble!