P&G sells Pringles for $1.5bn

Procter & Gamble (PG) has completed a prolonged quest to offload its Pringles potato crisp business by agreeing to sell it for a total $2.35bn to Diamond Foods (DMND), a move that marks an exit from the food sector for the world’s biggest consumer goods company.

Diamond will pay $1.5bn in 29.1m shares of common stock and take on $850m of Pringles debt in the transaction, which is expected to be completed by the end of 2011. It will involve one-time costs of about $100m over the next two years for Diamond Foods.

Shares in Nasdaq-listed Diamond Foods gained as much as 10 per cent, or $6.22, to $63 in early morning trading in New York. P&G shares, which have fallen 2.7 per cent in the last year, dropped 0.4 per cent, or 23 cents, to $62.03.

San Francisco-based Diamond will add the 45-year-old Pringles brand to a stable of products that includes Kettle Brand potato crisps and Pop Secret microwave popcorn.

Pringles had been the odd one out among P&G’s personal care and household product brands. The US company had discussed selling it since at least 2005. In 2007, it hired the mergers and acquisitions arm of Blackstone to explore its options.