NEW YORK (TheStreet) -- Shares of Diamond Foods (DMND) are gaining by 9.66% to $36 in pre-market trading on Friday morning, following speculation that Kellogg (K) is in advanced talks to acquire the snack products maker in a possible $1 billion deal.

Kellogg, which is known for its breakfast foods and cereal brands including Frosted Flakes, Rice Krispies and Eggo waffles, could offer between $35 and $40 per share, sources told the New York Post. The price of the deal could reach over $1.5 billion.

"Kellogg is somewhere between aggressive and desperate to use mergers to try to evolve its business away from breakfast cereal," a source told the Post.

Sales of Kellogg's breakfast cereal have been struggling lately and a deal with Diamond would help the company transition away from cereal and further into snack foods.

Diamond placed itself on the auction block earlier this year and requested final bids last week, the Post noted.

Diamond's snack brands include Kettle potato chips, Emerald nuts and Pop Secret popcorn.

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