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Procter and Gamble To Merge Pringles Brand with Diamond Foods with Significant Supply Chain Upside Implications

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This week’s joint announcement of a definitive agreement to merge Procter& Gamble’s current Pringles© business into Diamond Foods has lots of significant supply chain implications and could provide the prime supply chain integration story for 2011. The transaction, valued at $2.35 billion is subject to approval by Diamond shareholders, and is expected to close by the end of calendar year 2011.  Under the terms of a “Reverse Morris Trust” transaction, P&G will establish a separate entity to hold the Pringles© business, while Diamond’s existing shareholders will maintain ownership of approximately 43 percent of the combined company. This is a similar arrangement that P&G used to structure previous divestitures of Folgers© to J.M. Smucker. The joint press release outlines other terms of the agreement including the assumption of Pringles ©outstanding debt by Diamond. The deal, when completed, has the potential to immediately create Diamond Foods as the new number two snack […]