In a merger of snackmakers, Snyder’s-Lance is adding to its stable of brands by acquiring Diamond Foods for about $1.27 billion.
Snyder’s-Lance offer of about $40.46 a share represents a 16% premium to Diamond’s closing price on Tuesday. The stock closed up nearly 9%, at $38.00, on Wednesday.
“Diamond Foods is a clear industry leader with exceptional brands, and we’re excited to bring together these two highly complementary companies,” Carl E. Lee, Jr., president and chief executive of Snyder’s-Lance, said Wednesday in a news release.
Diamond Foods’ brands include Kettle potato chips, Pop Secret popcorn and Emerald nuts, while Snyder’s-Lance makes Snyder’s of Hanover pretzels and Cape Cod potato chips.
Both the Snyder’s-Lance and Diamond boards have approved the merger, and Oaktree Capital, Diamond’s largest shareholder, will vote in favor of the deal, which is expected to close early next year.
Snyder’s-Lance said the acquisition will strengthen its store-delivery network in the U.S. and help the company expand in the U.K. and across Europe. The company forecast annual cost-savings of $75 million and said the purchase will boost earnings per share in 2016.
“We plan to take full advantage of the combined sales forces of Snyder’s-Lance and Diamond to drive stronger top line growth than either company could achieve alone,” Lee said. “Additionally, we will have an opportunity to grow internationally with Diamond’s existing European platform, bringing unique products to consumers in that market.”
Diamond itself has grown through acquisitions but its bid to buy Pringles from former owner Procter & Gamble in 2012 was derailed after an accounting probe forced it to restate earnings. The company agreed to pay $5 million last year to settle U.S. regulatory charges that former executives underreported walnut costs to raise profit.
“The combination of Diamond and Snyder’s-Lance provides the opportunity to create significant value for our stockholders and offers immediate benefits for consumers,” Diamond’s CEO Brian J. Driscoll said.