Public Relations Theory

15Investor Relations

Alexander V. Laskin

Gatorade, a sports drink created in 1965 at the University of Florida to help Florida Gators athletes replenish electrolytes, carbohydrates, and water during sport activities, is the leading brand among consumers. In fact, Gatorade accounts for about three fourths of all sports drinks sales. It is no surprise that it was a prominent target for acquisition by large drink companies. In 2000, it looked like Gatorade would become a part of the Coca‐Cola family. The acquisition deal was pioneered by Douglas Daft, who at the time was both the CEO of Coca‐Cola and the chairman of its board of directors. With his support, the deal seemed set in stone. All the due diligence and formalities were completed, press releases were drafted, and even a conference call with analysts was already scheduled to announce the acquisition. Yet, at the last second, Coke investors through their representatives on the board of directors led by Warren Buffett, cancelled the deal. The Wall Street Journal concludes: “How Coke’s biggest acquisition attempt ever was fumbled is the story of a CEO who couldn’t – or wouldn’t – force his will on his board” (McKay, Deogun, Spurgeon, & Eig, 2000). But it is also a story of a growing power of investors that in turn makes investor relations, a function responsible for managing relations with investors, shareholders, financial analysts, and other members of the financial community, top priority for corporations around the world. ...