Charlotte-based snack maker Snyder’s-Lance will acquire a San Francisco healthy snack company called Diamond Foods for $1.91 billion in cash and stock. The deal is expected to close in early 2016.
The Diamond deal expands Snyder’s-Lance’s portfolio of “better-for-you” snacks, which it has been building as consumer preferences lean toward healthier options. Diamond’s product line includes Kettle Brand chips, Pop Secret popcorn and Emerald snack nuts.
Under the deal, Diamond stockholders will get 0.775 Snyder’s-Lance shares and $12.50 in cash per Diamond Foods share when the transaction closes, the two companies said. In mid-morning trading Wednesday, Snyder’s-Lance shares were down more than 9 percent at $32.85, and Diamond was up almost 7 percent at $37.29.
Snyder’s-Lance, known for Hanover’s pretzels and Lance peanut butter sandwich crackers, will assume approximately $640 million of Diamond’s debt under the deal, which has been approved by both companies’ boards.
The deal is subject to the approval of both snack makers’ stockholders, federal regulation and other customary closing conditions. When it closes, Diamond President and Chief Executive Officer Brian Driscoll will join the Snyder’s-Lance board of directors.
“By combining the resources and expertise of Snyder’s-Lance and Diamond, we expect to see widening profit margins with additional scale and an expanding line of our better-for-you products,” Carl Lee, president and CEO of Snyder’s-Lance, said in a statement.
Snyder’s-Lance anticipates annual cost-savings of $75 million and said the deal will boost its earnings in 2016. In a separate report Wednesday, the company reported third-quarter sales and earnings that were up from a year ago but that fell below Wall Street expectations.
Diamond Foods has evolved from a fast-growing company to a takeover target, Bloomberg reported Wednesday. Diamond’s plans to buy Pringles from then-owner Procter & Gamble in 2012 were derailed when an accounting probe forced it to restate its earnings.
The company was found to have falsified walnut costs in an effort to inflate its earnings and exceed stock analysts’ estimates, according to the Securities and Exchange Commission. Then-CEO Michael Mendes was ousted, and the company had to pay a settlement of $5 million last year.