Ocean Spray Rejects Northland Offer of $800 Million

Ocean Spray, the world’s leading cranberry juice maker, rejected on Friday an unsolicited offer from Northland Cranberries Inc.. The $800 million acquisition of Ocean Spray’s beverage business and brand name would have created a strong competitor to the Coca-Cola Minute Maid and Pepsi-Cola Tropicana Brands.

The economics of the deal just didn’t work. Northland, which pulled in just more than $100 million in revenue during its latest fiscal year (about an eighth the amount of annual revenue generated by Ocean Spray’s juice business), offered to finance the deal with some cash and the rest with Northland stock. According to Reuters, the written response to the offer cited that Northland stock “has not had a record of good management or value.”

In addition, Northland decided to publicize the offer at a time which was very close to Ocean Spray’s March 8 annual meeting. At this meeting, the company will be electing a new set of directors. As a result of the timing of this release, Ocean Spray claims that this was a planned move by Northland to disrupt this meeting by setting into turmoil the group of 900 growers that own Ocean Spray.

Regardless of this offer being rejected or accepted in a restructured form, the cranberry market is still very weak. The category as a whole does not have nearly as many competitors and new products as it once did at its peak in the early 1990’s.

Stay tuned as this story develops…