Diamond Foods has failed to find a buyer for the entire $1-billion snack foods company, so says it will explore the sale of individual brands, according to a report from the New York Post. The maker of Kettle potato chips, Emerald Snacks, Pop Secret popcorn and others reportedly doesn't currently have the scale to go head to head with larger competitors, notes the Post.
The company's debt is making it difficult to borrow more than $100 million to fund deals. Selling one of the businesses could ease the burden, giving the company the funds to expand. The Kettle chips business alone is believed to be able to lure a price from $1-1.5 billion. Estimates are such that a buyer could pay as much as $200 million for the Pop Secret brand, and $150 million for Emerald nuts.
Asked if Diamond Foods would be a buyer of any of the companies or a seller, president and CEO Brian Driscoll answered, “We think that our portfolio range needs to be expanded. We don’t think we have the kind of range that’s ideal for where we want to take the company over time.” He didn't say if Diamond would be a seller or a buyer.
All of the company's business lines are dealing with a challenging market, say sources familiar with the matter. Pop Secret, for example, sells popcorn in microwave packets, while the trend is to buy fully popped popcorn. A drought in California has taken nut prices higher, squeezing margins.
Kettle, the most attractive brand in the lineup is mostly regional, with popularity in the Western part of the country and in England, so needs national distribution to better compete, according to industry sources. Attempts to sell the entire company to Mondelez and other logical buyers were unsuccessful.