The fallout from the Diamond Foods (NASDAQ:DMND) accounting scandal continued Wednesday as the company’s promising deal to buy Procter & Gamble’s (NYSE:PG) Pringles brand has fallen apart, giving way to a new agreement with Kellogg (NYSE:K).
Diamond’s $1.5 billion deal with P&G has been in jeopardy ever since last year’s reports that the company erroneously reported payments to walnut growers, and looked further shaken after last week’s announcement that CEO Michael Mendes and CFO Steven Neil would be placed on “administrative leave.”
The Pringles deal was expected to make Diamond the second-largest snack foods company behind PepsiCo (NYSE:PEP) — a status that now will be granted to Kellogg after its own $2.7 billion purchase, according to the company’s CEO, John Bryant.
“Pringles has an extensive global footprint that catapults Kellogg to the number two position in the worldwide savory snacks category, helping us achieve our objective of becoming a truly global cereal and snacks company,” Bryant said in a statement.
DMND shares, which have slid about 75% from their September 2011 peak, actually were up about 3% before the opening bell, though they still are down about 40% this week after news of Mendes’ ouster. K shares look to open more than 3% higher.
– Kyle Woodley, InvestorPlace Assistant Editor