LONDON (CNNfn) - French food maker Groupe Danone said Thursday it had ended talks about a possible bid for Quaker Oats Co., just 24 hours after declaring an interest.
"Despite the strategic and operational logic of a possible combination with Quaker Oats, Danone Group has decided that the financial terms of such a possible acquisition would not be in the best interests of its shareholders nor consistent with its stated strategy of creating shareholder value," Danone said in a statement.
Danone had expressed interest in Quaker Wednesday, a day after Coca-Cola Co. (KO: Research, Estimates) said it abandoned a bid to acquire the maker of Rice-A-Roni, Captain Crunch cereal and Gatorade sports drinks. Coke had been reported to be mulling a $14 billion offer.
Purchase, N.Y.-based PepsiCo Inc. (PEP: Research, Estimates), the world's No. 2 soft drink company, was largely viewed Wednesday as the most likely bidder for Quaker Oats.
Pepsi walked away from merger negotiations with Quaker Oats earlier this month, leaving a $13.7 billion stock-swap offer on the table. The negotiations reportedly fell apart after Quaker Oats insisted that any offer incorporate a "collar," or price-protection mechanism, meant to safeguard Quaker shareholders from any sudden downturn in the acquiring company's stock.
Paris-based Danone's stock shot up 7.7 percent to 155 Thursday after it said its own talks with Quaker had ended. Its shares tumbled more than 10 percent on Wednesday as investors worried that the company might enter a deal for Quaker (OAT: Research, Estimates) that would dent its earnings.
Analysts had questioned whether Danone (PBN) could afford a takeover of such a size. In a conference call with analysts Wednesday, Danone warned it would pay for any acquisition with shares and that a deal would not boost earnings per share before 2003.
Quaker shares fell $7.44 to $87 and Pepsi lost $1.75 to $44.75 on Wall Street Wednesday.