Share the wealth, Mr Pringles

April 7, 2011

The big retail story this week is the merger of Procter & Gamble’s Pringles crisps with Diamond Foods in a $2.35bn bid to create a new snack food giant.

The Pringles business will combine with Diamond foods, famous for its Emerald nuts, Pop Secret popcorns and Kettle crisps.

Procter & Gamble will feel they’ve got the better deal, receiving $1.5bn of Diamond stock and taking a 57pc stake in the new snack food company.

Diamond will take the rest whilst also inheriting $850m of Pringle debt.

However, Diamond have also profited as Michael J. Mendes, chairman and chief executive of Diamond Foods explains:

“This strategic combination will create an independent, global leader in the snack industry with a focus on quality and innovative products.”

So, the goal is to create a global leader in the snack industry and the acquisition of the Pringles brand, by Diamond, means that the business will more than triple its current size. Following this, the enlarged company expects net sales in next year of around $1.8bn.

With Pringles being sold in more than 140 countries, it comes as no surprise that Diamond were keen to acquire the snack company – given their goal of world snack food domination.

P&G have also explained how shareholders will profit from the deal. They believe that the merge will allow them to focus more on cosmetics and healthcare products, which will in turn add around 50 cents a share to its earnings.

The sale of Pringles to Diamond removes the last remaining food product that P&G possessed, having previously sold Sunny Delight orange juice and Jif peanut butter – while bringing in hair-care companies Clairol and Wella.

So it’s an obvious case of rebranding for P&G, who are keen to drop their food ties in favour of the expanding beauty and cosmetics market. A bold move as Pringles, and other such brands have favoured them well over the years – perhaps they feel the crisp market is ‘going a bit stale’.

In other news…

Ronald McDonald and co. are set to offer 50,000 ‘McJobs’… in a single day!

That’s right, popular fast food chain McDonalds, are lining up what would be the biggest corporate recruitment drive over a 24-hour period in history.

They intend to fill positions in many of its 14,000 outlets across the US in all positions, from managers to cleaners.

Whilst they have admitted the hiring of 50,000 people on one day is a publicity stunt, they believe it will help fill the vacancies, as more people are likely to hear about it.

It’s a very bold move as there is potential for mass walkouts after the first week, however they are to be commended for offering jobs where the fear of unemployment looms over many.