Snyder’s-Lance to acquire Diamond Foods in $1.91bn deal

Snacks maker Snyder’s-Lance Inc. agreed to buy the maker of Emerald almonds and Kettle potato chips in a $1.27 billion deal that highlights how big food makers are racing to add simpler, less-processed foods to their portfolios.

Diamond Foods, Inc. (Diamond) is a packaged food company focused on building, acquiring and energizing brands.

Based in Stockton, Ca., Diamond Foods specializes in culinary nuts. The price tag also includes about $640 million in debt.

“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”, he added.

The company has forecast annual cost-savings at around $75 million as a result of the deal and said it will also boost earnings per share for next year.

“Diamond Foods is a clear industry leader with exceptional brands, and we’re excited to bring together these two highly complementary companies”, he said.

In a separate statement today, Snyder’s reported revenue for the third quarter of US$416.8 million, an increase of 1.8% compared to the third quarter of 2014, but lower than analysts’ expectations of US$436.49mln.

Snyder’s-Lance, based in Charlotte, North Carolina-based, is the product of the 2010 merger of two snack makers, Lance Inc. and Snyder’s of Hanover.

Snyder’s-Lance may encounter challenges with walnut supply and demand for the Diamond of California brand. “Snyder’s-Lance expects this transaction will expand and strengthen its direct store delivery network in the US and provide Snyder’s-Lance with a platform for growth in the United Kingdom and across Europe”.

“One thing that’s very important here for us is we’re going to have a much stronger West coast presence with our plants”, said Carl Lee, president and chief executive officer of Snyder’s-Lance, in an October 28 conference call with financial analysts.

Both boards have approved the transaction, and Oaktree Capital, Diamond’s largest shareholder, plans to vote in favor of the deal.

Diamond Foods gapped open sharply higher Wednesday, but traded in a range for the bulk of the session.