Snack food maker Snyder’s-Lance Inc. has agreed to acquire competitor Diamond Foods Inc. for about $1.9 billion in a cash-and-stock deal, the two companies announced on Wednesday, Oct. 28. The deal will be paid for with $12.50 in cash and 0.775 shares of Snyder’s-Lance for each share of Diamond Foods. The purchase price also includes the assumption of about $640 million of debt. The merger will be financed by the Charlotte, N.C.-based acquirer with cash on hand, existing credit facilities, committed financing provided by Bank of America Merrill Lynch and is expected to close in early 2016. Industry sources have previously told The Deal that pegging the value of Diamond Foods’ at $35 per share or above would be overpaying for the company. Snyder’s-Lance is limiting its risk by largely paying with stock rather than debt, but the company is diluting its shareholders in the process. The multiple Snyder’s-Lance is shelling out is typically reserved for companies with consistent growth. Such a transaction may end up giving Snyder’s-Lance shareholders indigestion. The buyer’s shares were down more than 8% in midmorning trading, to about $33. The acquirer’s CEO Carl Lee justified the deal, stating that the two companies’ combined sales teams would achieve better revenue growth, and grow internationally via Diamond’s presence in Europe.
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