Procter & Gamble Sells Pringles to Diamond Foods for $1.5 Billion (PG, DMND)

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Packaged foods maker Diamond Foods, Inc. ( DMND ) and consumer products maker The Procter & Gamble Company ( PG ) on Tuesday announced an agreement to sell the Pringles potato chip business to Diamond for $1.5 billion in stock.

In pursuant to the deal, Diamond will also assume Pringles' $850 million debt, making the total value of the deal worth $2.35 billion.

P&G will own 29.1 million shares of DMND stock after the transaction has completed. Pringles will be spun off from P&G and merged into DMND, with P&G retaining ownership of about 57% of the newly-combined company, and DMND owning around 43%.

Diamon Foods CEO Michael Mendes comments, "Pringles is an iconic, billion dollar snack brand with significant global manufacturing and supply chain infrastructure. Our plan is to build upon the brand equity Pringles has established in over 140 countries. This strategic combination will create an independent, global leader in the snack industry with a focus on quality and innovative products. Not only is this combination immediately accretive, it also creates a platform that we believe will allow us to build shareholder value for years to come."

Diamond Foods shares soared $4.38, or +7.7%, in premarket trading Tuesday, while Procter & Gamble shares were mostly flat.

The Bottom Line
We have been recommending shares of Procter & Gamble ( PG ) since Sept.1, 2009, when the stock was trading at $54.11. The company has a 3.10% dividend yield, based on last night's closing stock price of $62.26.

Diamond Foods, Inc. ( DMND ) is not recommended at this time, holding a DARS™ Rating of 3.4 out of 5 stars. The Procter & Gamble Company ( PG ) is a "Recommended" dividend stock, holding a DARS™ Rating of 3.5 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Stocks

Referenced Stocks: DMND , PG

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