Procter & Gamble is trying to terminate the planned $1.5 billion sale of its Pringles snack line to Diamond Foods after an accounting scandal, reports Bloomberg.
P&G and Diamond, which sells Emerald snack nuts, Kettle chips and Pop Secret popcorn, agreed to the $1.5 billion deal last spring But after Diamond replaced its CEO this week, its stock plunged and now P&G officials want out of the sale.
Diamond would have doubled its sales and become the world’s second-biggest snack company next to PepsiCo if the Pringles deal had gone through. This was an important strategic move for the company to mix up its product sales, which currently rely heavily on walnuts.
Some analysts allege that Diamond may have fudged its books to help bring about the Pringles deal. But now the scandal means it will be a while before the company can even consider diversifying its brand.
Diamond’s tricky situation should serve as a lesson for any company attempting to stretch its financials to make a business deal make sense. If you get caught, you could end up worse off than you started.
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