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The Federal Trade Commission (FTC) is readying for a vote as early as tomorrow on whether to try to block Pepsico Inc.'s proposed $13.8 billion acquisition of Gatorade sports drink maker Quaker Oats Co., a decision analysts see as a close call.
"I think it's very close," Patrick Schumann, branded consumer products analyst at New York-based Edward Jones, told Reuters. "All indications are that there's some split among the commissioners."
The FTC has a closed-door meeting scheduled Wednesday for "consideration of enforcement action in a nonpublic part II matter," commission-speak that could indicate a vote on a merger-related matter. An FTC spokeswoman would not comment on the nature of the meeting.
While other mergers are also pending before the FTC, a source familiar with the investigation into the Pepsico-Quaker deal said FTC staff members are pushing for data before Wednesday's meeting.
Earlier this month, a source close to the case told Reuters FTC staff attorneys recommended the agency go to court to block the merger, due to fears that the combined company would dominate the market for sports drinks.
Gatorade already commanded 78 percent of U.S. sports drink volume last year, while Pepsi archrival Coca-Cola Co.'s Powerade line controlled 15 percent, the report said.
Pepsi's All Sport came in at only 4.4 percent, but there is concern that the brand would disappear altogether without proper distribution and marketing muscle to back it up, leaving only two competitors in the market.
Pepsi has agreed to sell All Sport to Monarch Co., the Atlanta-based maker of Dad's Root Beer, for an undisclosed amount of money, but questions have been raised about whether the brand can be a viable competitor under Monarch.
Quaker and Purchase, N.Y.-based Pepsi have yet to comment on the FTC proceedings.