DMND (MM)

Snyder's-Lance Inc. on Wednesday said it agreed to buy fellow snack company Diamond Foods Inc. in a deal worth about $1.91 billion in a move by Snyder's to bolster its natural offerings.

Shareholders of San Francisco-based Diamond will receive $12.50 a share in cash and 0.775 Snyder's shares. The price tag also includes about $640 million in debt.

Snyder's, known for its pretzels, said the purchase of the maker of Kettle Brand chips, Emerald nuts and Pop Secret popcorn enhances its existing natural-food presence as well as its direct-store-delivery network in the U.S. Synder's also said Diamond gives it the opportunity to grow internationally with Diamond's existing European platform.

"Diamond Foods is a clear industry leader with exceptional brands, and we're excited to bring together these two highly complementary companies," said Snyder's Chief Executive Carl Lee.

The deal comes as traditional food companies scramble to adapt to shifting consumer preferences for foods that are perceived as more fresh and natural. Earlier this year, food giants Heinz and Kraft merged in a deal worth roughly $49 billion.

Snyder's said the Diamond deal will add to 2016 earnings, and said potential synergies include roughly $75 million in cost savings.

Amid deal chatter, Diamond shares have risen 13% this month to a 3½ -year high, but they remain far below the $90 reached in 2011—before a deal to merge with Pringles, then owned by Procter & Gamble Co., fell through amid accounting problems at Diamond.

Shares in both Diamond and Snyder's were inactive in premarket trading.

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com

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(END) Dow Jones Newswires

October 28, 2015 07:35 ET (11:35 GMT)

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