Bangalore: Procter & Gamble Co said it will sell its Pringles potato chips business to Diamond Foods Inc for $1.5 billion in stock, creating a new snack foods giant.
The transaction will be effected by P&G spinning off its Pringles business and combining this entity with Diamond Foods. P&G shareholders will own 57% of the combined company and Diamond stockholders the rest.
Diamond, known for its Pop Secret popcorns and Kettle chips, will assume $850 million of Pringles debt as part of the deal.
By adding Pringles to its portfolio, Diamond will more than triple the size of its snack business, and expects to see net sales of about $1.8 billion in the fiscal year ending 31 July 2012, the companies said in a statement.
Diamond, which has grown through acquisitions, had bought General Mills’ Pop Secret business for $190 million in Sept. 2008 and certain assets of Harmony Foods Corp in May 2006. It bought potato-chips maker Kettle Foods for $615 million February 2010.
Diamond expects to incur one-time costs of about $100 million related to the transaction over the next two years.