Playing to Win

Chapter Five

Play to Your Strengths

Most corporate mergers fail to create value. The bigger the deal, the less likely it seems to produce success. There are many cautionary tales, including AOL Time Warner, DaimlerChrysler, Sprint-Nextel, and Quaker-Snapple. In each instance, promised synergies failed to materialize, value was destroyed rather than created, and shares plummeted. In the case of Snapple, Quaker paid $1.7 billion for the brand in 1995, promising to turn it into the next Gatorade. Less than three years later, Quaker unloaded a much-diminished Snapple for just $300 million. Time Warner valued AOL at approximately $190 billion at the time of their merger and just ten years later spun it off for a mere $3 billion.¹

So how did P&G’s ...