Diamond Foods, Inc.
Robbins Arroyo LLP: Acquisition of Diamond Foods, Inc. (DMND) by Snyder’s-Lance, Inc. (LNCE) May Not Be in Shareholders’ Best Interests
Robbins Arroyo LLP is investigating the proposed acquisition of Diamond Foods, Inc. (NASDAQ: DMND) by Snyder’s-Lance, Inc. (NASDAQ: LNCE). On October 28, 2015, the two companies announced the signing of a definitive merger agreement pursuant to which Snyder’s-Lance will acquire Diamond Foods. Under the terms of the agreement, Diamond Foods shareholders will receive $12.50 in cash and 0.775 shares of Snyder’s-Lance for each share of Diamond Foods they own, the value of which is equivalent to $40.46 per share of Diamond Foods.
Is the Proposed Acquisition Best for Diamond Foods and Its Shareholders?
Robbins Arroyo LLP’s investigation focuses on whether the board of directors at Diamond Foods is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $40.46 merger consideration represents a premium of only 30.3% based on Diamond Foods’ average one-week closing price prior to rumors of the deal surfacing in the media on September 23, 2015. This premium is significantly below the average one-week premium of nearly 41.7% for comparable transactions within the past five years.
On September 29, 2015, Diamond Foods reported strong earnings results for its fourth quarter 2015. Non-GAAP net income for the quarter was $7.2 million, an increase of 21.1% from the previous quarter. Adjusted EBITDA was $29.3 million, an increase of 22.4% from the previous quarter. Additionally, Diamond Foods has beat consensus analyst estimates for adjusted EPS and adjusted net income in every quarter for the past five quarters. In commenting on these results, Diamond Foods President and Chief Executive Officer Brian J. Driscoll remarked, “We are encouraged by our fourth quarter earnings performance, which was fueled by strong gross margin improvement. We are also pleased with the continued growth of Kettle in North America, Pop Secret market share gains, and the early signs of success in the Emerald transition to stand up bags. … Looking ahead, we continue to believe we have a solid foundation for future growth across our portfolio.”
In light of these facts, Robbins Arroyo LLP is examining Diamond Foods’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.
Diamond Foods shareholders have the option to file a class action lawsuit to ensure the board of directors obtains the best possible price for shareholders and the disclosure of material information.
Diamond Foods shareholders interested in information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.