STOCKTON, CA -- Diamond Foods has agreed to purchase Procter & Gamble's Pringles potato chips brand in a deal valued at $2.35 billion. Diamond claims that the acquisition will establish the company as second-largest global savory snacks business behind PepsiCo's Frito-Lay unit. The transaction is expected to close by the end of the year.
Diamond will reportedly more than triple the size of its snack business with the addition of Pringles. The company's other snacks include Emerald Nuts, Pop Secret microwave popcorn, acquired from General Mills Inc. for $190 million in 2008, and Kettle potato chips, purchased for $615 million last year. Diamond began in 1912 as a California walnut growers' cooperative and completed its public offering in 2005.
The Pringles brand, sold in more than 140 countries, will help increase Diamond's global scale and more than double its snack sales in the U.S. and the UK, officials said. Diamond chief executive Michael J. Mendes will lead the combined company, which will have sales of about $2.4 billion.
The move comes as P&G looks to more closely focus its business on cosmetics and healthcare products.
P&G shareholders will retain a 57% stake in the new company while Diamond shareholders will hold the rest. Diamond shareholders will also take on $850 million of Pringles debt. Diamond said the Pringles deal will result in one-time costs of around $100 million over the next two years.
P&G's saddle-shaped Pringles potato crisps, stacked in the brand's signature canister, were first sold in the U.S. in 1968 and distributed internationally in 1975. The fried crisps get their unique texture from a mix of potatoes, wheat and potato starch, corn and rice flours.