Kellogg Pops Some Pringles
Kellogg (NYSE:K) snapped up Pringles today from Procter & Gamble (NYSE:PG) for a cool $2.7 billion in cash after Diamond Food’s (NASDAQ:DMND) bid crumbled due to its accounting issues, said the Wall Street Journal.
Last April, Diamond agreed to pay $2.35 billion for the Pringles business, but the deal collapsed after an internal investigation at Diamond revealed problems with its payments to walnut growers, said the report. It was announced on Wednesday that the deal was officially off.
At this point, it looks like investors approve of the acquisition. Kellogg shares rose 4 percent to $52.28 — the highest point since since early November. Diamond Foods shares gained 1 percent to $22.51. P&G is about the same.
Bank of America Merrill Lynch said, “Pringles is a great fit, expands K international reach and strengthens its snack business particularly in the U.S. and U.K.” Analysts say the cost savings at Kellogg could be as much as triple Diamond’s cost cuts.
Standard & Poor’s says the deal looks good for Kellogg, especially due to the broader international snack-food presence. In a note titled “finally embracing their inner snacks,” Deutsche Bank heralded Kellogg’s decision to move more into snacks and away from cereal, with the caveat that the Pringles brand isn’t as popular as it once was, and Kellogg’s investment needs could make the integration challenging.
Here’s how these stocks are performing now:
Kellogg Company (NYSE:K): K shares recently traded at $52.86, down $0.01, or 0.02%. They have traded in a 52-week range of $48.10 to $57.70. Volume today was 16,846 shares versus a 3-month average volume of 2,145,450 shares. The company’s trailing P/E is 15.64, while trailing earnings are $3.38 per share.
Procter & Gamble Co. (NYSE:PG): PG shares recently traded at $64.74, up $0.19, or 0.29%. They have traded in a 52-week range of $57.56 to $67.72. Volume today was 57,258 shares versus a 3-month average volume of 10,794,900 shares. The company’s trailing P/E is 18.98, while trailing earnings are $3.40 per share.
Diamond Foods, Inc. (NASDAQ:DMND): DMND shares recently traded at $23.88, up $0.42, or 1.79%. They have traded in a 52-week range of $21.41 to $96.13. Volume today was 212,631 shares versus a 3-month average volume of 3,492,830 shares. The company’s trailing P/E is 10.57, while trailing earnings are $2.22 per share.
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