Diamond Foods to acquire Kettle Foods
February 26, 2010
SAN FRANCISCO — Diamond Foods, Inc. has entered into an agreement to acquire Kettle Foods from Lion Capital L.L.P. for $615 million.
“Kettle Foods’ passion for making great tasting, natural potato chips has attracted a loyal consumer following and shaped a truly premium brand that has our deep respect,” said Michael J. Mendes, chairman, president and chief executive officer of Diamond Foods. “Diamond and Kettle Foods share a history of relentless focus on flavor and product quality and working collaboratively with our retail partners. By adding Kettle, including its talented team of employees, our snack business will have greater scale, which will help us to drive even greater innovation in the snack market. We expect that the acquisition will be accretive in the first year and is a strong, strategic fit to better support our long-term growth plans.”
Diamond Foods said the transaction will significantly improve Diamond’s strength by increasing its scale in the snack market and add premium brands to Diamond’s snack portfolio.
“Our successful ownership of Kettle Foods reflects Lion’s distinctive strategy of investing in and growing strong consumer brands,” said Lyndon Lea, partner of Lion Capital. “Since our acquisition in 2006, we have dramatically increased Kettle’s strategic value through category-leading innovation and penetration gains in the U.S. and U.K. snacking markets, leading to double-digit annualized growth in group revenues and 30% annualized growth in group profitability.
“In the U.S., we doubled the capacity of the business through investment in a new manufacturing plant in Wisconsin, which supported even higher rates of profit growth within the U.S. market. We are pleased to be selling this iconic brand and highly strategic asset to Diamond Foods, whose heritage of delivering the consumer premium snacking products and market-leading innovation complements the core tenets of Kettle Foods.”
Diamond Foods said it expects the acquisition to be accretive to earnings per share for fiscal 2011. The purchase is expected to be partially funded with a five-year $600 million credit facility, a future equity offering and available cash resources. If the transaction closes before the beginning of fiscal 2011, the company expects full-year e.p.s. to be in the range of $2.25 to $2.35.