After months of baited breath soft drinks giant PepsiCo Inc. finally obtained the approval, albeit by a hair's breadth, to buy Quaker Oats Co. and its Gatorade brand after the US Federal Trade Commission deadlocked over whether the new company would harm competition in the sports drinks market.
The vote on going to court to block Pepsi's $13.9 billion purchase was 2-2, one vote short of the majority needed to file suit.
A unanimous decision was then taken to close the investigation of the deal, an agency statement said.
According to analysts, Quaker's Gatorade, with a 78 per cent share of US sports drink volume last year, would increase PepsiCo's American drink sales by almost 10 per cent and aid its battle against Coca-Cola Co., the number one beverage maker.
To blunt competition concerns, Pepsi said on May 1 it would sell the All Sport brand to Monarch Co., the Atlanta-based maker of Dad's Root Beer.
Despite that concession, FTC staff lawyers feared competition from All Sport would evaporate if the brand were cut loose from Pepsi's distribution system and recommended that agency commissioners block Pepsi's purchase of Quaker Oats.
PepsiCo, the maker of Pepsi soft drinks, Frito-Lay snacks and Tropicana juices, said after the FTC decision that it would not distribute Gatorade in its bottling system for 10 years as part of the agreement to sell All Sport to Monarch.
But PepsiCo will still be able to use Gatorade's broker warehouse distribution system, which has helped Gatorade become so successful, PepsiCo spokesman Richard Detwiler said.
"We think Gatorade has lots of growth opportunities," he said.