Diamond Foods Inc. is buying Procter & Gamble Co.‘s Pringles chips business in a deal valued at $1.5 billion.
Analysts have been speculating for years that Procter & Gamble might shed Pringles, as the world’s biggest consumer products maker had indicated in the past that the food business didn’t fit in with the rest of its portfolio.
Diamond, whose products include Emerald nuts, Pop Secret microwave popcorn and Kettle Brand potato chips, said Tuesday that the transaction will more than triple the size of its snack business and help bring its total annual revenue to about $2.4 billion.
“Pringles is an iconic, billion dollar snack brand with significant global manufacturing and supply chain infrastructure,” Diamond chairman, president and CEO Michael J. Mendes said in a statement.
Diamond, which concentrates on snack foods, says the addition of Pringles will more than double its snack sales in the U.S. and U.K., which are Pringles’ two biggest markets. It will also give Diamond a greater presence in U.S. grocery, drug, mass merchandise and convenience stores.
The Pringles brand is more than four decades old, and is sold in more than 140 countries, with manufacturing plants in the U.S., Europe and Asia.
In recent years, P&G has sold Folgers coffee, Jif peanut butter, Crisco shortening and Sunny Delight drinks, leaving Pringles as the last major food brand for the Cincinnati consumer products company. Its other products include Tide detergent and Gillette shavers.
The deal includes $1.5 billion in Diamond stock and the assumption of $850 million of debt. The combined business, whose headquarters will stay in San Francisco, will be led by Mendes.
Procter & Gamble said the Pringles deal will likely be part of a “split-off” transaction in which stockholders can choose to take part in an exchange offer, swapping Procter & Gamble shares for Diamond stock.
According to AdAge.com Pringles is currently handled by WPP’s Grey Global Group, New York, with help from siblings Mediacom, New York, on communications planning and Possible Worldwide, Cincinnati, on digital. Publicis Groupe’s Starcom MediaVest Group handles media buying. The brand got $31 million in measured media support last year, according to Kantar Media.