Coca-Cola has declined to comment on the "rumour and speculation" that it has laid a deal worth US$15bn on the table of Chicago-based food company Quaker Oats. US consumer food groups have recently been involved in a frenetic wave of consolidation and just two weeks ago Quaker turned down the US$14.8bn PepsiCo takeover bid because it was "insufficient." Coca-Cola's hopes of a swift resolution were dashed by the news that the French dairy and biscuits group Danone was also mulling an offer after losing out on Nabisco and Keebler earlier this year. These groups eventually went to Philip Morris (Kraft Foods) and Kellogg respectively.

The main prize at stake is the Gatorade drink, the profit-boosting jewel in Quaker's crown that commands over 80% of the sports drink market in the US and has the potential to dominate globally through Coke's unchallenged network. It is debateable whether this is really enough to warrant such a high price, which was beyond even the optimistic estimates of Quaker's value. At close of trading last Friday (17 November), Quaker's shares were worth US$90.31, valuing the company at just US$11.8bn, and it also carries US$500m in debt. Considering the estimates of Credit Suisse First Boston, however, Coca-Cola could gather US$650m every year in revenue and cost synergies, making the potential value of the deal apparent.

Quaker executives met this weekend to debate the Danone and Coca-Cola bids, which are as yet unofficial, and it seems that the latter has emerged as the most likely candidate, especially considering US investors' current reluctance to take stock in a French company.

If Coke is successful, it will more than likely be required to divest its existing sports drink Powerade in order to allay anti-competition concerns, but its portfolio will be increased with Rice-A-Roni, Cap'n Crunch cereal, oatmeal and Aunt Jemima pancake syrup. This has caused some consternation within the Atlanta ranks, however, as some executives are concerned about whether these food divisions can be successfully absorbed, but then the brands could probably find a home should Coca-Cola wish to sell some assets. It is not clear whether Coke has already lined up a potential buyer for the food activities, which are performing far less spectacularly than Gatorade. The board of directors is expected to meet tomorrow (21 November) to discuss and possibly finalise the bid.

Industry experts, who are viewing the bidding war with interest, expect to see Pepsi upping the stakes and say that it is possible that other companies such as Nestlé may also get involved. As Nestlé and Danone both have substantial food interests, this could facilitate an acquisition of Quaker.