Diamond was rumored to be trying to thrash out a deal with P&G last year, but reportedly failed to agree on how it might be structured.
Under the deal outlined this morning, Diamond will pay $1.5bn in 29.1m shares of common stock and take on $850m of Pringles’ debt in the transaction, which is expected to be completed by the end of the year. The combination of the two would create a company with roughly $2.4bn in annual sales and earnings of more than $400m.
The separation would occur via a ‘split-off’ transaction in which P&G shareholders can elect to exchange P&G shares for shares of Diamond. Diamond's shareholders would continue to own about 43 percent of the combined company.
Category clout: More leverage with retail customers
Pringles’ biggest markets are the US and the UK, but they are sold in more than 140 countries.
Diamond Foods chief executive Michael Mendes said the deal would give it a broader manufacturing base, access to growth markets in Asia, Latin America and Central Europe and more than triple the size of its snacks business, significantly boosting its category clout with retailers.
"Our plan is to build upon the brand equity Pringles has established in over 140 countries. This strategic combination will create an independent, global leader in the snack industry with a focus on quality and innovative products.”
San Francisco-based Diamond, which has historically focused on nuts, has been steadily expanding its snack foods portfolio in recent years, adding Pop Secret microwave popcorn to its stable in 2008 and Kettle Chips in 2010.