Business | General
P&G aims to halt Pringles sale to Diamond Foods
Search for new buyer may not be difficult
- Bloomberg
- Published: 00:00 February 12, 2012
New York: Procter & Gamble Co. has decided it will seek to terminate its sale of the Pringles snack business to Diamond Foods Inc., said three people with knowledge of the situation, following the accounting probe that ousted Diamond's chief executive officer.
P&G, which agreed in April 2011 to sell Pringles to Diamond for $1.5 billion (Dh5.5 billion), must now determine how to exit the deal and whether Diamond will resist the breakup, said one of the people, who declined to be identified because the matter is private. If the sale were to proceed, P&G shareholders would own a majority of Diamond's stock.
Ending the agreement may leave P&G searching for a new buyer for Pringles, known for stackable chips in flavours from loaded baked potato in the US to green seaweed in China. The snack business is growing, with scant private-label competition, said Ali Dibadj, an analyst at Sanford C. Bernstein & Co.
"It's an attractive category," Dibadj, who's based in New York, said in an interview. "There may be many buyers out there, both in snacks and in food."
Shares
P&G fell 0.3 per cent to $63.88 at Friday's close in New York. Diamond rose 1.7 percent to $23.52.
Diamond, which sells Emerald snack nuts, said February 8 it was putting CEO Michael J. Mendes and its chief financial officer on leave, as well as restating earnings for the past two years, after the board found payments to walnut growers had been booked in the wrong periods.
P&G, based in Cincinnati, had previously said the sale depended on a favourable resolution of the probe. P&G finds the results "very disappointing," Paul Fox, a spokesman, said on February 8.
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