Investopedia: Diamond Foods Adds A New Facet

It was not that long ago when Diamond Foods (Nasdaq: DMND) was just a nut company with some clever commercials. Given the corporate maneuvers of the past few years, though, it is clear that management has goals and aspirations of becoming much more. With larger food companies apparently always on the lookout for ways to "manage" their brand portfolio, Tuesday's deal for Pringles may not be the last deal for this company. 

The Terms of the Deal 

Diamond Foods and Procter & Gamble (NYSE:PG) announced a deal whereby Diamond will acquire the Pringles brand and business in a somewhat convoluted split-off transaction called a reverse Morris Trust deal. Diamond will paying $2.35 billion for Pringles, with the deal to be structured around $1.5 billion of stock (29.1 million shares) and the assumption of $850 million in debt. There will be collars on the deal, though, that could move the debt portion up or down depending on the performance of DMND shares before the close of the deal.

As part of the deal terms, PG shareholders will have the option to exchange their shares in PG for DMND if they so choose. One way or another, current Diamond shareholders will own about 43% of the new company, so this clearly a large transaction for the company. (For more, see Mergers And Acquisitions: Understanding Takeovers.)

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