Kellogg reportedly mulling $1.5bn deal to buy Diamond Foods

22-Oct-2015 - Last updated on 23-Oct-2015 at 16:30 GMT

Kellogg is reportedly in talks to buy Kettle Chips and Emerald nuts maker Diamond Foods in a deal that could be valued at around $1.5bn and further increase Kellogg’s presence in the snacking category as the ready-to-eat cereals market continues to struggle.

Kellogg could pay $35 to $40 a share for Diamond, claimed the New York Post, citing “sources close to the situation”.

Asked about the report, Kellogg told FoodNavigator-USA: “Per our policy, we don’t comment on rumors or speculation.”

Ready to eat cereal... in terminal decline?

US consumption of ready-to eat cereal has been steadily dropping over the last decade as consumers have sought out more convenient - and often more expensive - alternatives, while ‘breakfast’ has switched from being one of three square meals a day to just another snacking occasion.

However, the performance of the category has "improved a little" this year, said Paul Norman, Senior Vice President & President, Kellogg North America, during Kellogg's Q2 earnings call in August.

While efforts to reposition Special K as a 'wellness' rather than a 'dieting' brand were starting to bear fruit, and early feedback on the new Origins line had been positive, Kashi was still struggling, he said. But he added: "We are seeing distribution losses subside and velocities begin to stabilize."

Click HERE to read about rumors that ConAgra is in advanced talks to sell Ralcorp to TreeHouse Foods.