Kellogg in talks to buy Diamond Foods for $1.5 bn

24 Oct 2015

Kellogg Co, the world's leading breakfast cereal maker Kellog's, is in advanced talks to buy snack foods company Diamond Foods Inc for more than $1.5 billion, the New York Post yesterday reported, citing unnamed sources.

Kellogg is likely to pay $35 to $40 a share for Diamond, the report said.

Diamond had early this year put itself for sale and last week asked for final bids. It is reported to be seeking a significant premium. Its stock closed yesterday at $34.99 at the Nasdaq Stock Exchange.

Founded in 1912, San Francisco-based Diamond Foods is a snack food and culinary nut company making potato chips, snack nuts, popcorn, inshell nuts and culinary nuts.

Its brands include Diamond of California, Kettle Brand, Kettle Chips, Emerald and Pop Secret.

Its biggest shareholders are hedge fund Oaktree Capital Management, with a 14 per cent stake, and BlackRock Institutional Trust Co, with nearly 7 per cent.

The company has around 1,700 employees and posted net profit of $33 million last year on revenues of $864 million.

With 2014 sales of more than $14 billion, Battle Creek, Michigan-based Kellogg is the world's leading producer of cereal and a leading producer of snacks and frozen foods.

Its brands, which include Cheez-It, Coco Pops, Corn Flakes, Frosted Flakes, Kashi, Keebler, Kellogg's, Mini-Wheats and Pop-Tarts, are produced in 18 countries and sold in more than 180 countries.

Kellogg has been trying to expand its snack foods business on par with its cereal business through strategic acquisitions.

It 2012, it acquired Pringles potato chip brand from Procter & Gamble Co for $2.695 billion and early this year bought Egyptian baker Bisco Misr.