Pringles: Kellogg Steps In As Diamond Acquisition Deal Crumbles
by Karlene Lukovitz,
Kellogg Co. has stepped in with a bid worth $2.7 billion to acquire the Pringles business from Procter & Gamble, after P&G and Diamond Foods Inc. mutually agreed to terminate Diamond’s proposed acquisition of Pringles, reports The Wall Street Journal.
Diamond’s agreement to pay $2.35 billion for Pringles fell apart after an internal probe that found Diamond had wrongly accounted for payments to walnut growers. Those findings resulted in the firings of Diamond’s CEO and CFO, and the results are being turned over to the SEC and the San Francisco U.S. attorney’s office, a source told WSJ.
Kellogg, which expects to complete the Pringle’s acquisition by this summer, estimated that it will add about eight to 10 cents a share to its 2012 earnings, before transaction costs. After costs, the purchase is likely to dilute earnings by between 11 and 16 cents per share. The company’s outstanding debt is expected to increase by about $2 billion, and Kellogg said it plans to limit its share repurchase program as a result.