NEW YORK, United States – Diamond Foods Inc. is buying Procter & Gamble Co’s Pringles chips business in a US$1.5 billion deal, the biggest in a string that have given the maker of Pop Secret popcorn and Kettle chips a growing share of the snack aisle.

The deal also completes P&G’s exit from all its major food businesses. The maker of Tide and Pampers has sold off Folgers coffee, Jif peanut butter, Crisco Shortening and Sunny Delight drinks in recent years.

The Pringles deal is structured to create a new company under the Diamond Foods name.

P&G shareholders will get about 57 per cent of the combined company, while Diamond shareholders will own about 43 per cent.

Diamond, founded in 1912 by a group of California walnut growers, was known for nuts in shells for most of its history. But since Diamond went public in 2005, an acquisition binge has broadened its array of snacks. It up Pop Secret in 2008 and Kettle last year.

The Pringles transaction will dwarf those deals, more than tripling Diamond’s revenue to about US$2.4 billion a year.

Pringles would become the third billion-dollar brand to be sold off by P&G in recent years, after Folgers and Actonel. It leaves P&G with 23 brands with US$1 billion in annual sales or more.

Diamond’s stock jumped US$5.88, or 10.3 per cent, to US$63.10 in morning trading, near their 52-week high of US$63.87.

“Pringles is an iconic, billion-dollar snack brand with significant global manufacturing and supply chain infrastructure,” Diamond Chairman, President and CEO Michael J Mendes said in a statement.

Diamond says the addition of Pringles will more than double its US and UK snack sales in the US and UK, which are Pringles’ two biggest markets. It also will give Diamond a greater presence in US grocery, drug, mass merchandise and convenience stores.

The Pringles brand is more than four decades old and is sold in more than 140 countries, with manufacturing plants in the US, Europe and Asia. It has continued to add flavors based on region, including mozzarella stick and marinara in North America, prawn cocktail in Europe, jalapeno in Latin America and seaweed in Asia.

Pringles has also rolled out variations of the product, including Pringles Baked Stix in 2006, Pringles 100-calorie packs in 2007 and Pringles multigrain in 2009.

The deal includes US$1.5 billion in Diamond stock and the assumption of US$850 million of debt. The combined business, whose headquarters will stay in San Francisco, will be led by Diamond’s Mendes.

The debt that Diamond assumes could vary based on movements in its stock price before the deal closes. The debt amount could increase by up to US$200 million or be reduced by up to US$150 million based on the mechanism.

Procter & Gamble, which has chosen to focus more on categories such as health and beauty products in recent years, said the Pringles deal will likely be part of a “split-off” transaction in which stockholders can choose to take part in an exchange offer, swapping Procter & Gamble shares for Diamond stock.

A call to P&G was not immediately returned. The company’s stock dipped 13 cents to US$62.13.

The deal will give Procter & Gamble a one-time earnings boost of about US$1.5 billion, or 50 cents per share.

If the Pringles transaction closes before the end of the year, Diamond anticipates fiscal 2012 earnings per share between US$3 and US$3.10 per share on revenue of about US$1.8 billion. The forecast excludes costs associated with the Pringles deal.

Diamond, which also makes Emerald nuts, expects about US$100 million in one-time costs tied to the Pringles transaction over the next two years.

The deal, which still needs Diamond stockholder approval, is expected to close by the end of the year.