If You Invested $1,000 In Pepsi When It Bought Gatorade, Here's How Much You'd Have Now

If You Invested $1,000 In Pepsi When It Bought Gatorade, Here's How Much You'd Have Now

It's hard to believe Gatorade once wasn't owned by PepsiCo PEP. The iconic sports drink has been a staple of the Pepsi portfolio for 20 years and a top performer, ranking first in market share in its field for decade.

Acquiring Quaker: A long negotiation battle came to an end on Dec. 4, 2000, when Pepsi announced it was acquiring Quaker Oats for $14.5 billion in stock and debt.

The acquisition came after rival Coca-Cola Inc's KO negotiations with Quaker fall apart. Quaker bought Gatorade in 1983 to diversify itself into beverages.

Pepsi gained the Gatorade brand as the key asset in the acquisition and also strengthened its food division with cereal, mixes and snacks in the Quaker portfolio including several market leaders.

The acquisition was seen as expensive at the time with Pepsi paying 29 times earnings for Quaker compared to an industry average of 27.5 times for 14 recent food and beverage sector buyouts.

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Investing Alongside Pepsi: Investors who thought Pepsi was getting a good deal or believed in the long-term story of Gatorade could have invested in Pepsi shares at the time. The stock hit a high of $45 on Dec. 4, 2000 after announcing the buyout.

A $1,000 investment could have purchased 22.22 shares of PEP at the time. The $1,000 investment would now be worth $3,424.55 not including dividends, based on a current PEP share price of $154.12.

The investment in Pepsi would have returned 242% over the last 21 years, good for an average gain of 11.5% annually, not including dividends.

Pepsi now has a $213 billion market cap and ranks as the 52nd most valuable public asset on Assetdash.com, which includes stocks, ETFs and cryptocurrencies.

Photo: John McArthur on Unsplash

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