CINCINNATI (

TheStreet

) --

Procter & Gamble

(PG) - Get Procter & Gamble Company Report

said early Tuesday it will divest its Pringles potato chips brand to

Diamond Foods

(DMND)

for $1.5 billion worth of stock.

The move comes as Procter & Gamble looks to more closely focus its business on cosmetics and healthcare products.

P&G shareholders will retain a 57% stake in the new company while Diamond shareholders will hold the rest.

>> Takeover Targets: Consumer Stocks in Play

Diamond shareholders will also take on $850 million of Pringles debt.

Diamond, best known for its Emerald brand of nuts and trail mixes, Pop Secret popcorns and Kettle potato chips, will more than triple the size of its snack business with the addition of Pringles. The company now expects net revenue to total $1.8 billion in the fiscal year ending July 31, 2012.

Diamond has been expanding through acquisitions in recent years.

In 2010, Diamond acquired Kettle Foods for $615 million. In 2008, Diamond acquired Pop Secret from

General Mills

(GIS) - Get General Mills, Inc. (GIS) Report

for $190 million. And in 2006 it acquired certain assets from

Harmony Foods

.

TheStreet Recommends

Diamond said the Pringles deal will results in one-time costs of around $100 million over the next two years. P&G expects the divestiture to add around 50 cents per share to its earnings.

P&G shares edged 0.1% lower to $62.18 in early trading Tuesday while Diamond Foods soared 8.1% to $61.86 in the first minutes after the opening bell.

>> 15 Food Companies That Serve You 'Wood'

-- Written by Miriam Marcus Reimer in New York.

>To contact the writer of this article, click here:

Miriam Reimer

.

>To follow the writer on Twitter, go to

http://twitter.com/miriamsmarket

.

>To submit a news tip, send an email to:

tips@thestreet.com

.

READERS ALSO LIKE:

>> 15 Food Stocks Hit by Commodity Inflation

>> 10 Top Dividend Stocks for 2011

>> 10 Top Buy-Rated Real Estate Stocks for 2011

>> Education Stocks: 2011 Outlook

>>See our new stock quote page.

Get more stock ideas and investing advice on our sister site,

Stockpickr.com.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.