P&G Gets Out of Food Business With Pringles Sale

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Procter & Gamble is unloading its stake in the Pringles chip brand to Diamond Foods, in a $2.35 billion deal that gets P&G out of the food business.

Diamond Foods, which also owns Emerald Nuts, the Kettle chips brand and Pop Secret popcorn, “is contributing stock it values at $1.5 billion and assuming $850 million of debt from Pringles” as part of the M&A deal, notes the Wall Street Journal.

“Pringles is an iconic, billion dollar snack brand with significant global manufacturing and supply chain infrastructure,” said Michael J. Mendes, Chairman, President and CEO of Diamond Foods in a press release.

“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.  Not only is this combination immediately accretive, it also creates a platform that we believe will allow us to build shareholder value for years to come.”[more]

“We are confident Diamond Foods will be an excellent new home for our Snacks employees,” commented Bob McDonald, Chairman of the Board, President and CEO of P&G.  “This is also a terrific deal for our shareholders – maximizing value and minimizing earnings per share dilution.”

The deal will, according to the announcement, more than triple the size of Diamond’s snack business and also:

• Increase scale in US grocery, mass merchandise, drug and convenience channels to gain greater merchandising and distribution influence;

• Leverage Diamond’s sales and distribution infrastructure through a more than doubling of snack sales in the US and UK, which are Pringles’ two largest markets;

• Gain a broader global manufacturing and supply chain platform, with access into key growth markets around the world, including Asia, Latin America and Central Europe;  

• Increase Diamond’s geographic diversity, with international sales accounting for approximately 49% of total revenues on a pro forma basis.  

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