NEW YORK (CNNfn) - The U.S. Federal Trade Commission voted Wednesday to end its investigation of soft drink producer PepsiCo Inc.'s $13.8 billion acquisition of food processor Quaker Oats Co., clearing the way for the deal's completion.|
Regulatory approval had been delayed because of concerns that PepsiCo's acquisition of Gatorade, which holds an 80 percent share of the sports drink market, would create a monopoly.
The FTC met in a closed session Wednesday to consider enforcement action that would authorize staff to block the merger. But the commission split 2-2, which resulted in no action being taken. The FTC then voted 4-0 to close the investigation.
Earlier this month, CNNfn.com learned that FTC staff attorneys were recommending that regulators vote to block PepsiCo's purchase of Quaker, which has been on tap since last December. Quaker and PepsiCo said in June their proposed merger would be delayed at least until the current quarter as discussions with the FTC continued.
News of the approval caused Quaker (OAT: up $12.70 to $100.70, Research, Estimates) shares to surge nearly 14 percent in early afternoon trading. PepsiCo (PEP: down $2.74 to $43.89, Research, Estimates) dropped nearly 6 percent.
The $13.4 billion Quaker acquisition hinged on obtaining regulatory clearance in the U.S. and the two firms now expect to complete their merger within the next several business day, the companies said in a statement.
"We're delighted to get FTC clearance," PepsiCo Chairman and CEO Steve Reinemund said. "We look forward to completing the deal shortly and putting in action the detailed consolidation plans we've been building."
The combined firm will have $25 billion in revenue and give Pepsi a leadership position in the increasingly important non-carbonated beverage category, the fastest growing segment in the beverage industry.
PepsiCo said Wednesday that it has completed the sale of global rights to its All Sports beverage brand to Monarch Co. On May 1, PepsiCo announced plans to divest its All Sport beverage unit in an effort to please regulators. Atlanta-based Monarch owns Dad's Root Beer and Bubble-Up soft drinks.