Diamond Foods to sell snacks unit in parts

US-based Diamond Foods is planning to sell its snacks unit, which is estimated to be worth around $1bn, in parts after it could not attract a buyer for the complete unit.

The company has been planning to do away with its snacks unit, as it holds debt equal to five times that of earnings before interest, taxes, depreciation and amortisation (EBITDA), making it difficult for the company to borrow any more than $100m.

As the San Francisco-based producer of Kettle chips, Pop Secret Popcorn and Emerald Snacks could not find a bigger competitor to buy its business. It is exploring the option of selling it in pieces in order to generate the required currency.

The company is believed to have approached firms such as Mondelez, but could not find any positive response.

The Post cited a source as saying that the firm is said to be accepting bids on parts of the snacks unit through mid-October.

Investors believe that the Kettle potato chip business would fetch a price of anywhere between $1bn and $1.5bn. The firm is planning to sell its snacks unit as it does not have the scale to compete in the market. For instance, while the trend is currently for fully popped popcorn, Diamond’s Pop Secret sells popcorn in packets that can be microwaved.

Diamond Foods president and CEO Brian Driscoll, during an earning call this week, said: "We think that our portfolio range needs to be expanded.

"We don’t think we have the kind of range that’s ideal for where we want to take the company over time."

Following a drought in California, the prices of nuts have gone up, which in turn has impacted the company’s margin on its product.