Northland Cranberries Inc., the second largest cranberry juice producer in the US, has announced that it has launched a US$800m takeover bid for the market leader in the sector, Ocean Spray Cranberries Inc.
Northland’s CEO, John Swendrowski, said merging the two companies would result in cost savings and allow the two companies to compete more effectively with Coca-Cola and PepsiCo in the fruit juice market.
Under the terms of the deal, Ocean Spray, which is owned by around 900 cranberry growers, would remain a cooperative, but the publicly-traded Northland would manage the Ocean Spray juice brand. Northland said at least 55% (US$440m) of the offer would be cash, with the rest made up in Northland shares.
However, Chris Phillips, a spokesman for Ocean Spray, would not comment specifically on the offer, referring to it as an “expression of interest” and “not a formal offer.”
This response appears to have bemused Swendrowski, who worked for Ocean Spray until 1993. He said Northland had detailed the proposal in a letter to Ocean Spray’s acting chief executive, Barbara Thomas, whom he had also spoken with. “I don’t know how much more of an offer you can have,” he said. Northland had exploratory negotiations with Ocean Spray regarding a merger five years ago.
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