Coke Drops Bid for Quaker Oats

A T L A N T A, Nov. 22 -- Coca-Cola Co. abandoned its pursuit of Quaker Oats Inc., with the soft drink company’s board rejecting a dealreportedly worth $15.75 billion to acquire the maker of Gatorade,oatmeal and Life cereal.

Only hours after late Tuesday’s announcement by Coke, the Frenchfood conglomerate Danone Group issued a statement that it may makea bid for Quaker Oats.

Coke’s board decided against buying the Chicago-based companyafter meeting Tuesday in New York. No further talks between Cokeand Quaker Oats were planned.

The Coke board released a statement saying it was pleased withthe company’s “current strategic course” under chairman and chiefexecutive Douglas Daft, calling it the best means for enhancingshareholder value.

Company spokesmen declined further comment.

Moved to Block Rival’s Bid

The board’s reluctance to approve the deal was heavilyinfluenced by director and investor Warren Buffett, whose concernsranged from issuing new Coke shares to possible antitrustimplications, The Wall Street Journal reported today, citingsources familiar with the situation.

Nevertheless, both sides at one point believed a dealwas imminent as Daft and Quaker chairman Robert Morrison hadpublicity photos taken together, the Journal reported.

The board had been considering a stock offer valuing Quaker at$15.75 billion, or $115.09 per share, the newspaper reported.

Analysts said Coke had begun talks with Quaker Oats in part toblock a bid by its main rival, PepsiCo, to acquire Gatorade, whichcommands 83 percent of the U.S. retail market for sports drinks.Coke’s own brand, Powerade, has about 11 percent.

Investors had expressed disapproval of the deal, sending Coke’sshares down 10 percent since news reports of the talks surfacedSunday night.

Some analysts also had questioned whether Coke would have beenable to effectively manage Quaker’s lineup of food brands, whichinclude Rice-A-Roni, Cap’n Crunch and Life cereals and Aunt Jemimapancake products.