Quaker Oats - Snapple Acquisition Analysis
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 acquired the ice-tea and juice drink producing Snapple in 1994 to a price of $1.7 billion, an acquisition where all strategic alternatives was not considered. The Snapple acquisition provides several great examples of what could have been done differently. This examination discusses both companies internal goals pre-acquisition, the underlying reasons why Quaker Oats decided to acquire Snapple and which bias-traps Quaker Oats fell victim to when deciding to acquire Snapple. In addition, an exploration of the reasons why the acquisition failed, effects post-acquisition, and future recommendations will also be included.
Internal Goals and Company Mentality Pre-Acquisition In order to fully understand and appreciate the underlying reasons why companies engage in acquisitions, it is crucial to explore the internal goals, structure, and underlying mentality of the companies involved pre-acquisition. First, Quaker Oats, one of the most widespread American food companies, has focused on diversification since its foundation in 1901. Quaker Oats expanded from the cereal industry into food, groceries and toys. This diversification trend continued when William D. Smithburg accepted the role as the CEO in 1979. Smithburg diversified into
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 acquired the ice-tea and juice drink producing Snapple in 1994 to a price of $1.7 billion, an acquisition where all strategic alternatives was not considered. The Snapple acquisition provides several great examples of what could have been done differently. This examination discusses both companies internal goals pre-acquisition, the underlying reasons why Quaker Oats decided to acquire Snapple and which bias-traps Quaker Oats fell victim to when deciding to acquire Snapple. In addition, an exploration of the reasons why the acquisition failed, effects post-acquisition, and future recommendations will also be included.
Internal Goals and Company Mentality Pre-Acquisition In order to fully understand and appreciate the underlying reasons why companies engage in acquisitions, it is crucial to explore the internal goals, structure, and underlying mentality of the companies involved pre-acquisition. First, Quaker Oats, one of the most widespread American food companies, has focused on diversification since its foundation in 1901. Quaker Oats expanded from the cereal industry into food, groceries and toys. This diversification trend continued when William D. Smithburg accepted the role as the CEO in 1979. Smithburg diversified into