Shares of Diamond Foods Inc. (DMND) dropped 10% Friday, a day after the snack-nuts producer announced a major acquisition that will require it to sell stock and take on debt.
Late Thursday, Diamond said it agreed to acquire Kettle Foods from Lion Capital LLP for $615 million, a move that gives the company a much bigger bite of the premium potato-chip market and more than doubles the size of its snack business.
But the acquisition--about equal to the company's current market capitalization of about $650 million--also means it will sell new shares and take on a new five-year, $600 million credit facility.
"It looks like a good long-term move, but it's a very major undertaking,"Northland Securities analyst Chris Krueger said. "It adds some uncertainty, and for some investors, it's a good excuse to sell some stock."
Diamond Foods Shares Drop 10% on Acquisition-Related Worries
![Diamond Foods Shares Drop 10% on Acquisition-Related Worries Diamond Foods Shares Drop 10% on Acquisition-Related Worries](https://media.potatopro.com/kettle_chips_sea_salt.jpeg?width=1200&height=743&crop=smart&mode=crop)
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