The acquisition of all outstanding shares of Diamond Foods in a cash and stock merger was for approximately $1.91bn, according to the companies. Snyder’s will also assume about $640m of Diamond Foods’ debts.
“That’s the one thing Snyder’s was missing, that premium piece,” Marcia Mogelonsky, director of insight with Mintel Food and Drink, told BakeryandSnacks. “It’s a very clever move. It’s expensive but probably worth it.”
Snyder’s is known for Snyder’s of Hanover pretzels, Cape Cod and Jay’s brands, while Diamond Foods is known for Kettle Brand, Pop Secret and Emerald Snack nuts.
The agreement was approved by the Board of Directors of both Synder’s and Diamond.
Adding innovation, creating shelf space
Mogelonsky added that Diamond Foods will also help Snyder’s become a bit more innovative.
“I think it’s great,” she said. “They were already acquired once, as Kettle was acquired by Diamond. Kettle was the more innovative of the two. And they’ve done quite well under the Diamond banner.”
In the announcement of the acquisition, the companies said this combination will be an “innovative, highly complementary and diversified” collection of products. It was noted that the agreement will help expand Snyder’s “better-for-you” product line, something heavily in demand by consumers.
The deal is also expected to increase the company’s Direct Store Delivery network in the US and provide a platform of growth across Europe. Mogelonsky believes it is also likely to net Diamond brands much more shelf space than they previously had.
“It gives Diamond and Kettle a bigger spread [of shelf space],” she said. “Snyder’s has a larger presence in a lot of channels. Shelf space will be a big deal for them. I think it helps both of them.”
Taking advantage of the combined brand size
Carl E. Lee, Jr., president and CEO of Snyder's-Lance, said the company plans to take advantage of the combined sales force of both companies to help expand to an even larger size.
“Additionally, we will have an opportunity to grow internationally with Diamond's existing European platform, bringing unique products to consumers in that market,” Lee said. “By combining the resources and expertise of Snyder's-Lance and Diamond, we expect to see widening profit margins with additional scale and an expanding line of our better-for-you products.”
Despite the company positive, Mogelonsky said there will likely be bumps along the way due to the magnitude of the deal
“When big companies merge or acquire there’s always something that goes awry, but I think it’s a good move for both companies,” she said.