Central Valley’s Diamond Foods being acquired

STOCKTON

October 28, 2015 5:11am

•  Snyder's-Lance paying $1.9 Billion for Stockton company

•  “Provides the opportunity to create significant value for our stockholders”

Stockton-based nut and snack food company Diamond Foods Inc. is being acquired by Snyder's-Lance Inc., of Charlotte, N.C., for about $1.91 billion. Snyder's-Lance (NASDAQ: LNCE) says that under the terms of the agreement, stockholders in Diamond (NASDAQ: DMND) will receive 0.775 Snyder's-Lance shares and $12.50 in cash per Diamond Foods share upon closing of the transaction.

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 percent of the combined company based on outstanding share counts. "The combination of Diamond and Snyder's-Lance provides the opportunity to create significant value for our stockholders and offers immediate benefits for consumers," says Brian Driscoll, president and chief executive officer of Diamond Foods. "This transaction will create a diversified, branded snacking portfolio with greater operating scale.”

Diamond Foods is a snack food company with five brands including Kettle Brand potato chips, Pop Secret popcorn, Emerald snack nuts, and Diamond of California culinary nuts. Diamond was started in 1912 as a farmers’ cooperative to market Central Valley walnuts. It stayed as a coop for 93 years before converting to a publicly held stock corporation ten years ago. Snyder's-Lance says each Diamond Foods brand brings unique strengths that fit with its strategic plan while increasing the company's annualized net revenue to approximately $2.6 billion.

It says it will cut costs by $75 million a year with the acquisition. The “synergies” are expected to come from increased scale of the combined company, leveraging Snyder's-Lance existing distribution system and unspecified 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. Completion of the transaction is subject to approval by both Snyder's-Lance and Diamond stockholders. In conjunction with the agreement, certain stockholders of each company have entered into voting agreements and, subject to the agreements' terms and conditions, have agreed to vote their shares in favor of the transaction. After close of the transaction, Mr. Driscoll will join the board of directors of Snyder's- Lance.

The transaction is expected to close in early 2016, subject to stockholder and regulatory approvals and other customary closing conditions.

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