040611_Downloads_131_Apr6 - Downloads commenced April 6,...

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Downloads commenced April 6, 2011: Diamond Foods Buys Pringles From P&G. A far from insignificant strategic shift The AP (4/6) reports, "Diamond Foods Inc. took its biggest bite yet of the snack business with a $1.5 billion deal to buy the Pringles brand from Procter & Gamble Co." The company has been on an acquisition spree, although this particular deal will significantly increase the size of Diamond's operations, "more than tripling Diamond's revenue to about $2.4 billion a year." Still, the company will remain "a distant second in the snack business to PepsiCo's Frito-Lay, which controls nearly half of the market." The deal also marks the exit of Procter & Gamble "from all its major food businesses," which had included names such as Folgers, Crisco and Jif peanut butter. Reuters (4/6, Bhattacharjee) quotes Janney Capital Markets analyst John San Marco, who noted that even with the acquisition, Diamond "is still a fraction of Frito-Lay's snack business, literally about one- tenth of the size." Marco added, however, that "aside from Frito-Lay, there are no other real true global powerhouses. Pringles is certainly in better strategic hands as part of a dedicated snack business." Bloomberg News (4/6, Boyle, Timberlake) reports D.A. Davidson analyst Tim Ramey said, "Pringles was an orphan brand within P&G, and it improves Diamond's product mix dramatically, making it solidly a snack food company versus a commodity nut company." Other analysts voiced similar opinions, and noted that while its brand identity in the US has been stagnate for the past few years, it remains a major player overseas. "Diamond will assume $850 million in Pringles debt, bringing the total value of the transaction to $2.35 billion, the companies said today. Diamond expects the purchase to close by the end of the year." The Christian Science Monitor (4/6) notes, "The Pringles brand is more than four decades old and is sold in more than 140 countries. In recent years it has added many regional flavors, including mozzarella stick and marinara in North America, prawn cocktail in Europe, jalapeno in Latin America and seaweed in Asia." The Financial Times (4/5, Jopson, Bond, Lucas, Subscription Publication) notes that Diamond has
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040611_Downloads_131_Apr6 - Downloads commenced April 6,...

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