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... One of the largest mergers in this $600 billion industry was the horizontal merger between PepsiCo and Quaker Oats which occurred on August 2, 2001. This merger provided PepsiCo with the boost it needed to attain tremendous growth and positioned PepsiCo as a dominating force in the food and beverage industry.
In order to clearly understand the motivating factors of the PepsiCo and Quaker Oats merger, it is important to have an idea of the nature and standing of the two companies prior to the merger. ... 4
When Quaker Oats appeared ready to be acquired, many companies showed interest in this business venture, such as Danone, Nestle, Coca- Cola and PepsiCo. ... PepsiCo was a more feasible choice for this acquisition, as their Frito-Lay products made the other segments of Quaker Oats less of a risk and they were already adept at the production and marketing of some of these products. ... A contingency was that PepsiCo
3 Freeden, Bob. “Pepsico Guzzles Quaker Oats. ... 3 PepsiCo shares/ 1 Quaker Oats share, thus leaving the deal tax–free. ... In 1965, it merged with Frito-Lay, a snack company, to form PepsiCo. ... Currently, PepsiCo has revenues of about $27 billion and over 143,000 employees in over 200 countries.6 Over the years, PepsiCo has been in fierce competition with chief rival Coca Cola, with each trying to outperform the next. Coke gained a strong edge in the 1920s over PepsiCo; however, PepsiCo recovered slightly in the 1970s with the Pepsi Challenge. ...
Before the merger, PepsiCo’s non-carbonated drink portfolio included Aquafina water, Lipton teas, and Tropicana juices, among others. ... 8 Thus, PepsiCo knew that acquiring Gatorade would help it tremendously in it’s quest to build up it’s non-carbonated beverage sector and this was a major incentive in their decision to acquire Quaker Oats. ...
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Gatorade is not the only product of Quaker Oats to correspond with PepsiCo’s objectives. On the contrary, Quaker Oats’ food products give PepsiCo a well-balance portfolio of products that target a much larger pool of consumers. While PepsiCo was very profitable in the snack industry before the merger through its Frito-Lays division, it nonetheless covered only the domain of unhealthy and salty snacks such as Doritos, Tostitos, and Fritos corn chips. Thus, what PepsiCo needed to broaden its snack appeal was not another chip or greasy product, but rather a nutritious one. Quaker Oats manufactured exactly the products that PepsiCo needed to complement its salty snacks and help PepsiCo establish a presence in the nutritional snack industry. ... With the addition of Quaker’s snack products, PepsiCo was able to extend its reach into the morning on-the-go foods, grain-based snacks , and snacks aimed at kids. ... PepsiCo’s advertising strategy, known as “Pepsi Generation,” has focused on creating the image that Pepsi products are the hip beverages for the youth market. PepsiCo has succeeded in drawing teens, and has maintained its “cool” image through celebrity spokespeople such as Britany Spears, Michael Jackson, Tiger Woods, Michael. ... As such, from a marketing perspective, Gatorade perfectly fits into the PepsiCo portfolio. ... Secondly, PepsiCo can utilize their prior experience in youth advertising when developing a marketing campaign for Gatorade.
Approximate Word count = 2635
Approximate Pages = 10.5
(250 words per page double spaced)
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