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Diamond Foods (DMND) acquired the Pringle brand product from Proctor & Gamble (PG) for $2.35 billion, as reported in Dealbook.
When we think of Diamond Foods we think of nuts, edible nuts. Diamond's two main brands are Diamond and Emerald. It produces all kinds of nut products for cooking and eating. Among them are almonds, Brazil nuts, hazelnuts, pecans, pine nuts and peanuts. The product line also includes microwave popcorn and potato chips.
Pringle is the last food division of P&G to be sold. The Pringle brand is well known, with its thin, crispy potato chips. It was slow to catch hold but now is a household brand.
The deal calls for $1.5 billion of Diamond stock and the assumption of $860 million of Pringle debt.
The new company forecasts revenues of $2.4 billion and earnings of $410 million. Diamond shareholders would own 43% of the combined company.
Whether Diamond overpaid for Pringle remains to be seen. The market for processed food is under pressure. We are seeing a steady stream of price increases on products across the board. Certainly they are filtering down to the snack food segment. This puts profit margins under pressure. It could be that the sale of Pringle was a gift for P&G.
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