San Francisco-based Diamond Foods Inc. has entered into an agreement to acquire the Pringles brand from Procter & Gamble Co., Cincinnati, in a transaction valued at $2.35 billion. Subject to approval by Diamond shareholders and the satisfaction of customary closing conditions and regulatory approvals, the transaction is expected to be complete by the end of calendar 2011. Diamond's executive team and board of directors, led by Michael J. Mendes, Chairman, President and CEO, will manage the business and the company's headquarters will remain in San Francisco, Calif.
The iconic Pringles brand, the world's largest potato crisp brand with sales in over 140 countries and manufacturing operations in the U.S., Europe and Asia, has been built over 45 years with a combination of proprietary products, unique package design and significant advertising investment.
Diamond Foods (with snack brands including Diamond of California, Emerald, Pop Secret and Kettle brands, has created a premium snack-focused company with total revenues of approximately $2.4 billion. It has a history of building, acquiring and energizing brands through product and package innovation, efficient distribution and brand investment. Its The Company's total revenues have doubled and earnings per share (EPS) have grown more than four-fold in the past five years. The addition of Pringles will more than triple the size of Diamond's snack business and: Increase scale in U.S. grocery, mass merchandise, drug and convenience channels to gain greater merchandising and distribution influence; Leverage Diamond's sales and distribution infrastructure through a more than doubling of snack sales in the U.S. and U.K., which are Pringles' two largest markets; Gain a broader global manufacturing and supply chain platform, with access into key growth markets around the world, including Asia, Latin America and Central Europe; and Increase Diamond's geographic diversity, with international sales accounting for approximately 49 percent of total revenues on a pro forma basis.
"Pringles is an iconic, billion dollar snack brand with significant global manufacturing and supply chain infrastructure," said Michael J. Mendes, Chairman, President and CEO of Diamond Foods. "Our plan is to build upon the brand equity Pringles has established in over 140 countries. This strategic combination will create an independent, global leader in the snack industry with a focus on quality and innovative products. Not only is this combination immediately accretive, it also creates a platform that we believe will allow us to build shareholder value for years to come."
Bob McDonald, CEO, chairman of the board, and president of P&G, which has divested its foods brands over the years (it still has pet foods), said, "We are confident Diamond Foods will be an excellent new home for our snacks employees. This is also a terrific deal for our shareholders - maximizing value and minimizing earnings per share dilution."