SAN FRANCISCO — Diamond Foods, Inc. said its planned $1.5 billion acquisition of the Pringles snack business from Cincinnati-based The Procter & Gamble Co. has been delayed until the end of June 2012 because of an internal investigation at Diamond into its accounting. The transaction, which was first announced in April, originally had been expected to close by the end of this year.
On Nov. 1, Diamond Foods said its board of directors is investigating external communication regarding the company’s accounting for certain crop payments to walnut growers.
Procter & Gamble said it remains committed to the sale and believes it’s important the matter be understood fully and resolved before proceeding with the transaction.
“Timing of this transaction will not affect the timing of P&G’s planned restructuring,” Procter & Gamble said.
Once finalized, the acquisition will triple the size of Diamond Foods’ snack business, which also includes the Diamond of California, Emerald Nuts, Pop Secret popcorn and the Kettle brand of potato chips.
Meanwhile, the sale of Pringles would complete P&G’s exit from all major food businesses.
In a Nov. 2 research note, analyst Mitch Pinheiro of Janney Montgomery Scott downgraded Diamond Foods’ shares to neutral from buy. Mr. Pinheiro said there is “now potential Pringles deal risk that could disrupt the core of Diamond’s new growth story, which was central to our bullish thesis.”
If the acquisition proceeds as planned and closes in the first half of calendar 2012, Mr. Pinheiro said the bullish thesis would remain intact.
Diamond Foods’ shares fell $6.62, or 10%, to $57.50 in after-hours trading after the announcement. Procter & Gamble shares rose 18c to $62.89 after the announcement.