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Snyder’s-Lance Completes the Acquisition of Diamond Foods

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Details of the acquisition

On February 29, 2016, Snyder’s-Lance (LNCE) announced the completion of the Diamond Foods (DMND) acquisition. According to the terms of the agreement, the company acquired all of the outstanding shares of Diamond Foods in a cash and stock merger deal. Diamond Foods’ shareholders will receive 0.775 Snyder’s-Lance shares along with $12.50 in cash per share of Diamond Foods.

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Powerful snack food company in the making

The company entered into a definitive agreement to acquire Diamond Foods on October 28, 2015. Management thinks that this acquisition creates a powerful international snack foods company with an innovative and diversified product portfolio. It makes the company confident in competing broadly with enhanced capabilities. Through this acquisition, the snack food brands added to Snyder’s-Lance’s product portfolio are Kettle Brand potato chips, Emerald snack nuts, Kettle Chips, Pop Secret popcorn, and Diamond of California culinary nuts. These brands are expected to support the company’s strategic plan to enhance its total revenue.

The expectations from this deal also include developing the company’s overall mark in “better-for-you” snacking along with enhancing its natural food channel presence. It expects to achieve this by expanding and strengthening its direct store delivery network in the US. It also has a platform for growth in the United Kingdom and across Europe with Diamond Foods’ presence in those regions through its manufacturing facilities and full-scale operations.

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CEO’s view about the deal

Carl E. Lee, Jr., is the president and CEO of Snyder’s-Lance. He said that “We are very excited to have completed the acquisition of Diamond Foods and look forward to starting this new chapter in our Company’s history. Diamond has been a powerful industry leader in snack foods with exceptional brands and we’re excited to bring these two great teams together. By bringing together the resources and expertise of the Snyder’s-Lance and Diamond teams, we expect to see widening profit margins as we gain synergies and progress through our integration plans over the next 12 to 24 months. With the combined power of our sales teams, we will continue driving new product innovation as we broaden our geographic and consumer reach.”

Peers’ recent acquisitions

Its peers in the industry include Hershey (HSY), Mondelez (MDLZ), and WhiteWave Foods (WWAV).

  • Hershey acquired Shanghai Golden Monkey (SGM) and Allan Candy in 2014. It acquired Krave—a manufacturer of beef jerky snacks—in 2015.
  • In February 2015, Mondelez acquired Enjoy Life Foods—a private US snacking company—to drive its growth in the snacking business.
  • In 2015, WhiteWave Foods completed the acquisition of Wallaby Yogurt Company. It also completed the Vega acquisition.

The Consumer Staples Select Sector SPDR Fund (XLP) and the PowerShares DWA Consumer Staples Momentum Portfolio (PSL) invest 6.3% in Mondelez. The Vanguard S&P Mid-Cap 400 Growth ETF (IVOG) invests ~1% of its holdings in WhiteWave Foods.

In the next part of this series, we’ll discuss what impacted the company’s revenue in 2015.

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