Quaker to sell Snapple for $300 million, takes $1.4 billion loss on deal
CHICAGO (AP) _ Quaker Oats Co., which paid $1.7 billion to buy the Snapple beverage business in 1994 and has been disappointed with its performance since, today reached agreement to sell the New Age drink line for $300 million to Triarc Cos. Inc.
Quaker said the sale would reduce pre-tax profits by $1.4 billion, resulting in a loss.
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. A variety of marketing measures by Quaker, including a giveaway program last summer, failed to reinvigorate sales and the fruit-juice and iced-tea line lost more than $100 million.
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.
``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 .
Analysts said that Quaker had paid too much for Snapple in the first place and that the purchase was plagued by bad timing. Sales started downward just as Quaker acquired Snapple.
Triarc plans to operate Snapple with its Mistic Brands Inc. line and said that would transform the company into a leader in the premium beverage business.
``We are proud to be future owners of a brand as great as Snapple and believe that our strong management team ... will be able to move our beverage business forward,″ said Triarc Chairman Nelson Peltz.
New York-based Triarc, with nearly $1 billion in annual revenue, has widely diverse interests including its Royal Crown Co. and Mistic Brands beverages, Arby’s Inc. restaurants, National Propane liquefied petroleum gas and C.H. Patrick specialty dyes and chemicals businesses.
Triarc said it expects to complete the purchase in the second quarter of this year, pending a federal antitrust review.