Coca-Cola Reportedly Near Agreement to Buy Odwalla

Shares of Odwalla Inc. jumped 50% after reports that beverage giant Coca-Cola Co. was in talks to purchase the upscale juice company.

Beverage Digest, a trade publication, reported Friday that Coke was close to buying the Half Moon Bay, Calif., company, citing unnamed sources close to Coke.

A deal with Odwalla would give Atlanta-based Coke a strong foothold in the noncarbonated beverage segment, said John Sicher, editor of Beverage Digest.

“Over the past five or 10 years, American consumers have developed an interest in healthy nutritious products,” Sicher said.

“Coke sees that they would have a niche in the noncarbonated beverage business. Odwalla runs the gamut from orange juice to smoothies to different kinds of juice blends. They also have soy shakes.”

As news of the possible deal spread, Odwalla’s stock rose $3.25 to $10.05 on Nasdaq. Coke shares were up 39 cents to $48.98 on the New York Stock Exchange.

Coke spokeswoman Natalie Rule declined to comment Monday. Calls to Odwalla were not immediately returned.

Coke has been trying to boost its noncarbonated beverage business because of a slowdown in sales growth of soda, Sicher said.

Coke had considered a deal with Procter & Gamble to market products such as Minute Maid juice and Pringles chips jointly, but the deal was scrapped in September.

Odwalla reported revenue of $93 million for 2000 and $98 million for the first nine months of fiscal year 2001.

Last February, Odwalla announced it would merge with juice company Fresh Samantha Inc., based in Saco, Maine, in a stock deal valued at $27 million.

Odwalla and Samantha offer more than 45 juices, smoothies, dairy-free milk, dairy-free shakes, spring water and natural food bars.

Odwalla’s image was tarnished in 1996 by a deadly E. coli outbreak linked to its juice. A Colorado girl died and 66 others were sickened by bacteria in Odwalla’s unpasteurized apple juice.

The company later pleaded guilty to 16 counts of shipping an adulterated food product and paid a $1.5-million fine, the biggest ever in a food-poisoning case.

The company also settled at least 17 civil lawsuits and began pasteurizing its apple juice.