Blog: Could Diamond Foods sell itself piecemeal?
Katy Askew | 6 October 2015
With market talk rumbling on over whether Diamond Foods is up for sale, attention has now turned to if the company could be preparing to sell its snack food brands separately having failed to secure a buyer for the business as a going concern.
The maker of Kettle Chips, Pop Secret and Emerald – whose snack brands are valued at US$1-1.5bn plus – is said to be accepting bids on its various brands throughout October.
When rumours first emerged that Diamond could be shopping itself, we took a look at the potential acquiorers in our insight pages. Kellogg seemed an obvious choice with its struggling cereal business but better performing snack operations in the US. The group could benefit from synergies as well as feed products into its existing distribution channels. Elsewhere, PepsoCo is obviously a good fit – but the snack giant has done little in the M&A space in its domestic market of late. And there are some candidates more out of left-field – perhaps the likes of Tyson could be tempted by the protein aspect of Diamond's nut business. And of course, there are always international buyers. Yildiz Holding, perhaps, or China's Bright Food?
In a conference call earlier this week, Diamond management sought to cast itself as the hunter rather than the hunted, suggesting that it is on the lookout for potential M&A to expand high-growth areas of its portfolio. However, with a significant stake in the group – almost 15% - held by Oaktree Capital Management, perhaps the question is whether the investment vehicle wants to cash in its chips. Pressure from Oaktree, coupled with head winds from Diamond's relatively small scale and commodity pressures, could prove just the incentive to put up the for sale sign.
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