Consolidate Snapple's operations with Gatorade

1
Consolidate Snapple's operations with Gatorade

• By Housmane SOW
• 10/24/2005

2
Quaker Oat

• In 1994 William D. Smithburg then CEO of Quaker
  bits 1.7 billion to buy Snapple Beverages.
• Snapple then had annual sales of 700 million
• Critics were that the transaction was overprice
  therefore, could not be a profitable investment.

3
Smithburgs success

• 11 years prior to 1994 the company was successful
  in the acquisition of Gatorade.
• Paid 238 million for Gatorade with annual sales
  of 90
• Compare to 1.7 billion of Snapple with annual
  sales of 700 million.

4
The strategy for success

• Sources of value acquisitions are
• Market power (access to new customers)
• Cost efficiency from economics of scale.
• To achieve any of the above values, company
  should consolidate its operations.

5
The strategy for success

• Market power (access to new customers)
• Snapple well established
• Appealed to all ages with incomparable iced tea
  and juice drink
• Excellent distribution channel
• This creates a new business knowledge

6
The strategy for success

• Cost efficiency from economics of scale
• Resemblance would bring efficiency in Marketing.
• Create a cost saving
• Financial Market values revenue growth due to
  cost reduction
• Better market price

7
Just Consolidate

• Any question?