Paul Fox, a spokesperson for P&G, said the news of Diamond Foods' restatement and its plans to replace top executives was "very disappointing" and that the company plans to look at its next steps as Pringles is a "very valuable asset" that has garnered interest from other parties.
"We're keeping all options open," Fox said.
Diamond Foods agreed to acquire the Pringles snacks brand from P&G in April for $1.5 billion in stock and the assumption of $850 million in debt.Diamond Foods' shares were trading at around $60 in the wake of the Pringles' deal announcement in April. The transaction's original terms called for a swap of 29.1 million Diamond shares, which closed Wednesday at $36.66 and were down more than 40% in after-hours action. On Wednesday, Diamond Foods said it was restating its results to properly account for certain payments to walnut growers and that an investigation by its audit committee found "material weaknesses" in its internal controls. The company also named an acting CEO and CFO, placing Michael Mendes and Steven Neil on administrative leave, and said it's working to complete the restatements and file required reports with the Securities and Exchange Commission, which is probing Diamond Foods along with the Justice Department. P&G's Fox would not elaborate on the number or names of the other companies interested in Pringles and said that the process would "take time." Procter & Gamble told Forbes in December that its Pringles deal was contingent on a favorable outcome to the SEC investigation. In a statement about the audit committee's findings, Diamond Foods said: "The Audit Committee has concluded that a 'continuity' payment made to growers in August, 2010 of approximately $20 million and a 'momentum' payment made to growers in September 2011 of approximately $60 million were not accounted for in the correct periods, and the Audit Committee identified material weaknesses in the Company's internal control over financial reporting." Effective immediately, Rick Wolford was acting president and CEO of Diamond Foods and Michael Murphy was named acting chief financial officer. Wolford was previously the chief executive officer of Del Monte Foods. Murphy is a managing director at financial consulting firm Alix Partners. Shares of Diamond Foods were last quoted at $20.95, down 43%, on volume of more than 6.4 million in extended trading. --Written by Alexandra Zendrian in New York.
>To contact the writer of this article, click here: Alexandra Zendrian
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