Kellogg Rumored to Be Buying Diamond Foods

Oct. 23, 2015
New York Post reports talk of billion-dollar deal.

Kellogg Co. is in advanced discussions with Diamond Foods about acquiring the $1 billion snack company, according to an Oct. 23 story exclusive to the New York Post.

The price would be more than $1.5 billion, sources said, and would move Kellogg deeper into salty snacks, in which it already has a significant toehold with its 2012 purchase of Pringles from Procter & Gamble.

Diamond makes Kettle potato chips, Emerald nuts and Pop Secret popcorn. It began as a walnut-growing cooperative and went public in 2005. Earlier this month, the Post published another exclusive story saying Diamond was looking for an acquirer, preferably for the entire company but possibly for key brands or product lines.

“Kellogg is somewhere between aggressive and desperate to use mergers to try to evolve its business away from breakfast cereal,” the Post quoted a source "close to the situation."

Diamond's fiscal 2015 just ended July 31, when it reported sales of $864 million, down $1 million from fiscal 2014. But net income was $33 million, an improvement over losses of $165 million and $163 million in its two previous fiscal years.

Kellogg, while remaining in the black, has seen its fortunes dip in recent years as cereal sales decline. Sales for 2014 were $14.6 billon, just a hair under 2014's $14.8 billion, and net income was $632 million, down precipitously from $1.8 billion. Savory snacks, which includes Pringles, was the only strong growth engine in Kellogg's bigger snacks category, which includes bar products and former Keebler crackers and cookies.

Both companies declined to comment to the Post on the story.

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