Snyder's-Lance signs agreement to acquire Diamond Foods

Snyder's-Lance, Inc. and Diamond Foods, Inc. have announced entering into a definitive agreement under which Snyder's-Lance would acquire all outstanding shares of Diamond Foods in a cash and stock merger transaction for approximately $1.91 billion, including the assumption of approximately $640 million of indebtedness.

The agreement has been approved by the Boards of Directors of both companies, who recommend that their respective stockholders approve the transaction. Oaktree Capital (NYSE:OAK), Diamond’s largest stockholder, has agreed to vote in favor of the transaction. Diamond Foods stockholders will own approximately 26% of the combined company based on today’s outstanding share counts.

The strategic combination of Snyder’s-Lance and Diamond Foods creates an innovative, highly complementary and diversified portfolio of branded products. Diamond Foods is a leading snack food company with five brands including Kettle Brand potato chips and KETTLE Chips. Each Diamond Foods brand brings unique strengths that fit with Snyder’s-Lance’s strategic plan, while increasing the company’s annualized net revenue to approximately $2.6 billion.

The transaction expands Snyder’s-Lance’s footprint in “better-for-you” snacking and increases the Company’s existing natural food channel presence. Snyder’s-Lance expects that this transaction will expand and strengthen its Direct Store Delivery (“DSD”) network in the United States, and provide Snyder’s-Lance with a platform for growth in the UK and across Europe.

Snyder’s-Lance expects the transaction to be immediately accretive to the Company’s 2016 annualized earnings. The significant synergy potential includes an estimated $75 million in annual cost savings, of which approximately $10 million will be re-invested in the business to achieve the combined company’s growth plans. This excludes transaction-related and integration costs. Synergies are expected to come from increased scale of the combined company, leveraging Snyder’s-Lance existing distribution system and cost reductions. In addition Snyder's-Lance will gain the benefit of tax net operating losses (NOL’s) with a net present value of $110 million dollars.

"Diamond Foods is a clear industry leader with exceptional brands, and we're excited to bring together these two highly complementary companies," said Carl E. Lee, Jr., President and Chief Executive Officer of Snyder's-Lance. " 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. We welcome the Diamond team to the Snyder's-Lance family and look forward to winning together."