Fast-growing Diamond Foods Inc. claims it will become the second largest global savory snacks company with the $2.35 billion acquisition of the Pringles business from Procter & Gamble.
The stock and debt-assumption deal will more than triple Diamond’s sales to $2.4 billion – which apparently means Pringles’ sales, while not specified, must exceed $1.6 billion. Diamond Foods doubled its sales last year with its $615 million acquisition of potato chip maker Kettle Foods.
“Pringles is an iconic, billion-dollar snack brand with significant global manufacturing and supply chain infrastructure," said Michael Mendes, chairman, president and CEO of San Francisco-based Diamond Foods. "Our plan is to build upon the brand equity Pringles has established in over 140 countries.”
“We are confident Diamond Foods will be an excellent new home for our Snacks employees," said Bob McDonald, chairman, president and CEO of Cincinnati-based P&G. However, it also marks P&G’s final exit from the food industry, the company having sold off Folgers coffee, Jif peanut butter, Crisco Shortening and Sunny Delight drinks in recent years.
Pringles “potato crisps” are made from dried potatoes and several starches and flours. The iconic shape, a hyperbolic paraboloid, is created by the unique machien that shapes and cooks them.
Pringles will join Diamond's savory snacks portfolio – which began with tree nuts under the Diamond of California and Emerald brands, but recently has grown with the acquisitions of Pop Secret microwave popcorn and Kettle chips.
The acquisition also will help Diamond’s access into key growth markets around the world, including Asia, Latin America and Central Europe. Diamond’s announcement said international sales should now account for nearly half of Diamond's total revenue.
The transaction includes $1.5 billion in Diamond common stock, which will be turned over to P&G stockholders, and the assumption of $850 million of Pringles debt. Diamond's existing shareholders would continue to own approximately 43 percent of the combined company.