The Federal Trade Commission (FTC) is getting ready to vote as early as Wednesday on whether to try to block PepsiCo Inc.'s proposed $13.8 billion acquisition of Gatorade sports drink maker Quaker Oats Co.
"I think it's very close," Patrick Schumann, branded consumer products analyst at Edward Jones, said.
"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.
"The timing of the inquiries is consistent with a vote on Wednesday morning," the source said.
Earlier this month, a separate source close to the case said 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 per cent of U.S. sports drink volume last year, while Pepsi archrival Coca-Cola Co.'s Powerade line controlled 15 per cent, according to industry newsletter Beverage Digest.
Pepsi's All Sport came in at only 4.4 per cent, 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.
William Pecoriello, beverage industry analyst at Sanford Bernstein, said in a research report that he believes Pepsi has agreed to let Monarch keep All Sport in the Pepsi bottler network for 3-5 years, while keeping Gatorade out of the bottler network for the same amount of time.
Spokespeople for Quaker and PepsiCo both declined to comment on the FTC proceedings.