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Danone walks, Quaker falls
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November 24, 2000: 1:17 p.m. ET
Danone becomes third to walk away; maker of Captain Crunch drops 4%
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NEW YORK (CNNfn) - Shares of Quaker Oats Co. fell by nearly 4 percent Friday as investors reacted to news that French food maker Group Danone had called off its offer for the company.
Quaker Oats (OAT: Research, Estimates) dropped $3.25 to $83.75 in afternoon trading. The French firm became the third company to walk away from Quaker in the past month. Danone (DA: Research, Estimates) had expressed interest in Quaker Wednesday, a day after Coca-Cola Co. (KO: Research, Estimates) dropped its $14 billion bid for the maker of Captain Crunch cereal, Rice-A-Roni and Gatorade.
 Purchase, N.Y.-based PepsiCo Inc., the world's No. 2 soft drink company, also walked away from Quaker recently, leaving its $13.7 billion stock-swap offer on the table.
More than one analyst Friday continued to believe that PepsiCo (PEP: Research, Estimates) remains the only viable bidder for Quaker.
"Danone was never really a serious bidder," said senior food analyst Jeff Kanter, of Prudential Securities. "Until we hear something from Quaker they are still selling the company but we've heard nothing from them."
Quaker's substantial snack business would fit well with Pepsi's Frito Lay business, which is the world's largest salty snack business, said analyst Heather Jones, of Bear Stearns.
"Pepsi is just a better fit," she said.
Anyone else?
Speculation now includes Swiss powerhouse Nestle S.A. and Cadbury Schweppes as potential acquirers.
A Nestle bid would be complicated because of its alliance, Cereal Partners Worldwide, with General Mills. Under the alliance, Nestle cannot buy competing products such as Quaker Oat's cereal business.
Quaker dominates the sports drink market through its Gatorade brand, which accounts for 84 percent of that market, analysts said. However, Nestle would not be able to leverage the Gatorade brand as well as Pepsi, which as the No. 2 soft drink producer, has a much stronger distribution network.
"It would be a much easier and smoother transition, more of an instant leverage, with Pepsi," Jones said.
Analysts downplayed a bid from Cadbury, which has yet to make an offer. Unilever, Europe's No. 1 consumer-goods maker, also got the thumbs down from analysts as a potential buyer of Nestle.
Unilever PLC has gobbled up a number of firms this year. In June, Unilever (UN: Research, Estimates) bought U.S. food company Bestfoods for $24.3 billion in cash and debt. In April, the company bulked up when it bought U.S. diet-food specialist Slim-Fast Foods for $2.3 billion in cash and then paid $326 million, also in cash, for quirky ice cream maker Ben & Jerry's.
"Unilever has got their hands full," Jones said. "Those were all within a year and they were pretty expensive transactions. [Unilever is] highly leveraged now."
Adding Quaker to its menu would be too much for Unilever to digest, Jones said. "I don't think investors would be too pleased if they tried to take Quaker on."
Quaker declined to comment as did Nestle. PepsiCo also did not comment. Cadbury Schweppes could not be reached for comment
Danone lost $1.25 to $26.07, PepsiCo fell by 25 cents to $44.50, Coke dropped by 56 cents to $59, and Unilever lost $2.64 to $56.25. 
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