Coca-Cola Bidding for Quaker Oats

Coca-Cola Co. is in intensive talks to buy Quaker Oats Co., offering about $15 billion in a deal that would put leading sports drink Gatorade in the hands of the world’s largest soft drink maker, sources familiar with the situation told Reuters on Sunday.

A deal, which would value Quaker Oats at about $115 a share, could be announced within the next few days, said sources who did not want to be identified. It could not immediately be determined if Coca-Cola would pay cash, stock or a combination of both.

It was said that talks between Coca-Cola and Quaker Oats were at a fragile stage and the sources warned that it was possible no deal would be reached.

It also was believed that French food group Danone was interested in acquiring Quaker Oats, but sources said Coca-Cola was the favored buyer as of Sunday evening.

Coca-Cola’s top rival, PepsiCo Inc., is reported to have held talks earlier this month to buy Quaker Oats for about $13.7 billion in stock, but talks failed to result in a deal.

“If [Quaker Chairman and Chief Executive Robert Morrison] turned down Pepsi’s bid, he must have had some other alternative,” said Prudential Securities food-industry analyst John McMillin.

Coca-Cola “can do more to expand Gatorade’s global distribution,” McMillin said.

In the past, when Morrison has been asked about the company being either bought or making its own acquisitions, he has said he is in favor of deals that make economic sense and produce shareholder value. Deals need to make strategic sense and provide new growth opportunities, he has said.

Chicago-based Quaker Oats, Atlanta-based Coca-Cola and Purchase, N.Y.-based PepsiCo would not comment.

Coca-Cola’s shares closed at $61.44 on Friday, and shares of PepsiCo ended Friday at $43.94. Both trade on the NYSE.