Diamond shares fall to two-year low on news of SEC probe
The investigation has raised further concerns about the company’s acquisition of the Pringles brand from Procter & Gamble, although Diamond said it had been informed that the SEC’s investigation should not be construed as an indication that any violations of law have occurred.
“Diamond is unable to predict the timing or outcome of the SEC's investigation,” the company said.
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 company has seen its shares lose more than half their value since it announced an internal probe into the walnut growers’ payments in November.
The investigation centers on allegations that Diamond Foods did not include certain payments in its fiscal 2011 accounts in order to improve its financial results in the lead-up to the Pringles deal.
Late last month, the company’s plunging share price had sparked speculation that the Pringles deal would become less attractive to P&G shareholders, and the company might be prompted to look elsewhere for a buyer. However, Procter & Gamble reaffirmed its commitment to the transaction at that time, saying that both companies remained committed to closing the deal in the second half of the fiscal year.
Diamond shares closed down 5.6% at $27.87 on Thursday, rebounding slightly from a two-year low of $26.11.
