But Quaker is on the defensive with shareholders and analysts, who question Snapple's growth potential and the price Quaker is paying for the company.
To help pay for the proposed $1.7 billion acquisition, Quaker is putting its European pet foods and Mexican chocolate divisions on the block. It hopes to find buyers before the end of 1995, Chairman-CEO William Smithburg said.
More sell-offs are likely. Speculation already centers on the U.S. pet food division, but Mr. Smithburg would not be specific at the Nov. 9 shareholders meeting.
Gatorade grabbed the lion's share of favorable news in Quaker's fiscal year that ended June 30. Volume rose 21% worldwide as Gatorade rolled out in seven new markets, which helped boost international volume 31%.
Gatorade President James Doyle told analysts Nov. 10 that after a bitter summer battle in the U.S., Gatorade held an 82% share of supermarket sports-drink sales and 78% of convenience store sales.
"That is only 2 points below a year ago despite two big competitors," he said in pointing out that neither Coca-Cola USA's PowerAde nor Pepsi-Cola USA's All Sport achieved a 10% share.
But shareholders' eyes were on Snapple. Some questioned the purchase price, considering Snapple's recent slide in stock value and earnings. To the contrary, Mr. Smithburg said, the drops show the company is ripe for acquisition and expansion through the existing Gatorade distribution network-domestically and internationally.
Mr. Smithburg wouldn't divulge a timetable for international expansion of Snapple, which is already sold in England. But he did say the cash nature of the deal makes for a quick buy that should be complete in a month, enabling Quaker to begin marketing Snapple to "health-conscious" consumers during first quarter 1995.
In the subsequent meeting with analysts, President-Chief Operating Officer Phil Marineau said Quaker wasn't surprised by Snapple's lower-than-expected results. He blamed excess retail inventory for part of Snapple's 7% third-quarter sales drop, saying, "We're convinced [these problems] are temporary .*.*."
Mr. Marineau told reporters Quaker plans to use Snapple's flavor development technologies to create other products like SunBolt, now in test.
Mr. Smithburg, responding to persistent takeover rumors that have dogged Quaker for years, blamed analysts and the media for the speculation. He said the Snapple acquisition is not a poison pill to thwart a possible takeover.
"It wasn't a matter of defense," he said. "The timing was right, and the thinking started last summer before these rumors ever jelled."
Julie Liesse in Chicago contributed to this story.