Diamond Foods to Acquire Kettle Foods
Diamond Foods Inc. announces it has entered into a definitive agreement to acquire Kettle Foods, makers of premium potato chips, from Lion Capital LLP for $615 million in cash. Pursuant to the agreement, Diamond will acquire Kettle operations in both the United States and the United Kingdom. The transaction is structured as a purchase of all of the outstanding shares of a parent holding company of the U.S. and U.K. Kettle operating entities. It is expected to close by the end of Diamond's fiscal year 2010, subject to customary conditions, including regulatory approval.
"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," says, Michael J. Mendes, chairman, president and CEO 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."
"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," says, Michael J. Mendes, chairman, president and CEO 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."
Highlights of the transaction:
Significantly improves Diamond's strength: The Kettle Brand has been a strong performer in the premium potato chip category with an excellent growth profile and history of expanding profit margins. On a pro forma basis, the addition of Kettle Foods would add more than $250M in revenues and almost double Diamond's EBITDA.
Increases addressable market by $9B: The potato chip category is large and growing. Kettle operates in the two largest potato chip markets in the world, the Uited States and the U.K., which increases the company's addressable market by $9 billion.
Increases scale in snack market: The addition of Kettle Foods will more than double the size of Diamond's snack business, enabling cross-promotional opportunities in the United States across a diversified offering of three complementary brands: Emerald, Pop Secret and Kettle.
Adds premium brand to Diamond's snack portfolio: Kettle Foods pioneered the kettle-cooked style in 1982, setting an early standard in the premium and adult chip categories on two continents with its natural ingredients and commitment to flavor innovation.