The lengthy battle to acquire Quaker Oats appears to be over, as PepsiCo yesterday reportedly agreed terms with the breakfast cereal and soft drinks manufacturer.

The deal, approved by the boards of both companies, values Quaker at around $13.4 billion, or 2.3 PepsiCo shares for each Quaker share.

This figure is identical to the bid from PepsiCo rejected by Quaker a month ago. However, a new condition has been introduced to protect Quaker stockholders from swings in PepsiCo’s stock value. Should shares in the soft drinks giant drop below $40 for ten days in the run-up to the deal, Quaker can terminate the agreement upon payment of a fee of $420 million. Conversely, Quaker shareholders will receive no more than $105 per share should PepsiCo’s stock rise dramatically.

The acquisition sees PepsiCo overtake Coca-Cola in the burgeoning non-carbonated soft drinks market, thanks to Quaker’s most successful brand, Gatorade. PepsiCo’s share in this market will jump from 18% to 33%, leapfrogging Coke’s 21%.

A statement is expected today.

News source: New York Times