Snack maker Snyder’s-Lance announced Wednesday that it had reached an agreement to acquire all of Diamond Foods’ outstanding shares in a $1.91 billion deal. The company forecast annual cost-savings of $75 million and said the purchase will boost earnings per share in 2016.
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Snyder’s-Lance, whose sales have beaten analysts’ estimates in the past three quarters, on Wednesday also reported lower-than-expected sales for the latest third quarter. Snyder’s-Lance and Diamond trade on the NASDAQ exchange under LNCE and DMND, respectively.
Shareholders of San Francisco-based Diamond will receive $12.50 a share in cash and 0.775 Snyder’s shares. The merger is still pending stockholder approval from both companies, though it’s anticipated it will close early next year.
Oaktree Capital, Diamond’s largest stockholder, has agreed to vote in favor of the transaction, Snyder’s-Lance said.
As an initial matter, the $40.46 merger consideration represents a premium of only 30.3% based on Diamond Foods’ average one-week closing price prior to rumors of the deal surfacing in the media on September 23, 2015.
Snyder’s-Lance also expects that this transaction to expand and strengthen its Direct Store Delivery network in the U.S., and provide it with a platform for growth in the United Kingdom and across Europe.
Shareholder rights attorneys at Robbins Arroyo LLP are investigating the proposed acquisition of Diamond Foods, Inc.
“Diamond Foods is a clear industry leader with exceptional brands, and we’re excited to bring together these two highly complementary companies”, said Carl Lee, Jr., president and CEO of Snyder’s-Lance.
Snyder’s-Lance has manufacturing facilities in North Carolina, Indiana, Arizona, Florida, Ohio Pennsylvania, Georgia, Massachusetts, and Wisconsin. “In addition, we expect the transaction will provide us with greater resources to further develop new product innovation”.
Net income for Q3, excluding special items, was $18.6 million, up from $16.4 million for the third quarter of 2014.
“Overall, we delivered year over year growth and gained share in all five core brands in spite of retailer consolidations, a softer back-to-school selling season and significant challenges in the mass merchandiser channel”, Lee said.
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Morgan Stanley is financial adviser to Snyder’s-Lance and Troutman Sanders is its legal adviser.
