Did Quaker Oats pay too little or too much for Snapple? Why?

If it was your
own (company's) money, how much would you pay?
Based on the limited data given in the case, the acquisition value of Snapple cannot
be evaluated without the companys financial statements. But we have tried to
evaluate the companys value based on the following approach:
Value of acquisition = Intrinsic value based on the cash flows + Premium for Market
Share + Purchase Value + Synergies. The assumptions are mentioned in the Excel
Sheet.
Based on our calculations and analysis, Quaker Oats overvalued Snapple possibly
because it thought that its growth which was impressive before the acquisition,
would continue. Even if the company targeted the traditional iced tea consumer, a
189% growth in the Ready-to-drink iced tea segment might not continue for long.
The overall estimated growth for Snapple Beverage Group Revenues (Exhibit 5) was
a mere 4.3% in 1997. Other reason would be that Snapple had a very good brand
equity. It was very popular and it engendered positive feelings in consumers.
As a result, we have taken the best possible scenario of growth which can be
reflected in our assumptions.
The Net Present Value of the future cash flows comes out to be around $1.3bn which
means that the price paid by Quaker Oats exceeded by $400mn. That would also be
the price we would pay if it were our own companys money.