Procter & Gamble has reaffirmed its commitment to complete the sale of global snack brand Pringles to Diamond Foods by June 2012, despite a sharp fall in Diamond’s share price last week.
Diamond Foods shares closed at $27.04 on Friday, down 23% from its Tuesday closing price of $34.97, following reports that director Joseph Silveira had committed suicide.
Kettle chips and Emerald nuts maker Diamond Foods struck a $2.35bn deal with Procter & Gamble in early April, but P&G shareholders need to exchange some of their shares for Diamond shares as part of the deal. The plunging share price had sparked speculation that the deal would become less attractive to P&G shareholders, and the company might be prompted to look elsewhere for a buyer.
Financial communications manager, corporate external relations at P&G Jennifer Chelune told FoodNavigator-USA: "Both Diamond and P&G remain committed to closing this deal in the second half of this fiscal year."
Silveira, who died on November 15, had served on Diamond Foods’ audit committee, but had withdrawn from an investigation of payments to walnut growers. Diamond Foods has said that Silveira’s death was unrelated to the investigation.
Special-situations analyst for Oscar Gruss & Son Inc. in New York, Louis Meyer, told Bloomberg on Wednesday, following an initial 21% slump in Diamond’s share price: “How do you incentivize P&G shareholders, who are used to a nice, stable stock, to take stock in a company that’s had a real eventful history in their stock price? Unless P&G is absolutely desperate to get rid of the Pringles line, they may have to go to Plan B and find another buyer if Diamond can’t complete the deal.”
Diamond had originally planned to close the deal by the end of the year, but had put back the date to June 2012 due to the accounting investigation.
Diamond Foods chief executive Michael Mendes said in April that the deal would more than triple the size of its snacks business, give it a broader manufacturing base, and access to growth markets in Asia, Latin America and Central Europe.