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Though it sounds a bit like bad news, Diamond Foods (DMND) trades 3.9% higher after the official...

Though it sounds a bit like bad news, Diamond Foods (DMND) trades 3.9% higher after the official collapse of its plan to buy Pringles from P&G. Herb Greenberg isn't shy about speculating on the fallout - tweeting that he can't help but wonder whether Kellogg is now considering buying the rest of Diamond's snack business.
Comments (6)
  • DeepValueLover
    , contributor
    Comments (8157) | Send Message
     
    I'm not saying that new executives at DMND have been quietly trying to find out if there is a bid for their other businesses but I'm not saying that isn't occurring either. ;)
    15 Feb 2012, 11:22 AM Reply Like
  • Day Trader001
    , contributor
    Comments (671) | Send Message
     
    Nothing like a middle ground position!
    18 Feb 2012, 07:31 PM Reply Like
  • Canary Cash
    , contributor
    Comments (471) | Send Message
     
    Herb Greenberg can't help inflating crap stocks with buyout rumors is more likely
    15 Feb 2012, 11:23 AM Reply Like
  • barcaboyvn
    , contributor
    Comments (275) | Send Message
     
    Any potential buyout would have to occur after the SEC investigation which is underway, if Diamond has to pay fine then I would think this current price level is 50% premium
    15 Feb 2012, 12:47 PM Reply Like
  • kenthomas
    , contributor
    Comments (5) | Send Message
     
    Herb wake up this is a $15 stock .
    What earning?
    Pie in the sky
    15 Feb 2012, 01:26 PM Reply Like
  • Max
    , contributor
    Comments (47) | Send Message
     
    This is the type of nonsense that bothers me. People on Wall Street seem more interested in throwing things at the wall and seeing what sticks then dealing with reality. Not only is Herb Greenberg suggesting that Kellog buy Diamond but also Tim Ramey the analyst at D.A. Davidson and even the Wall Street Journal. Ramey by the way also suggested people buy the stock at $90/share.

     

    Lets try to deal with facts. Here is what we know at this point: The SEC and DOJ are investigating the company. The auditors still have not finished their report. Diamond still has neither re-released the last two years of financial statements nor put out its last quarterly reports. Diamond also will face years of shareholder lawsuits. Litigation is time consuming, costly and unpredictable.

     

    Any acquirer would have to take over the entire company given the debt covenants and the liabilities from shareholder suits. Nobody knows what the current balance sheet look like. The walnut business is rapidly deteriorating and microwave popcorn is a god awful business (high input costs and no growth). Kettle Chips is a good asset but because Diamond refuses to breakout the numbers nobody knows how profitable it actually is.

     

    Currently Diamond is valued at about 10X EV/EBITDA. That assumes only $40 million will need to be expensed for last year. That is not depressed price given the problems with the walnut growers, the all in cost of litigation plus possible rising interest rates from breaching debt covenants.

     

    If you are buying the stock based on a hope for acquisition, I think you are making a big mistake. I wouldn't be surprised to hear that Diamond is trying to sell itself but I wouldn't hold out hope for a dumb enough buyer.
    15 Feb 2012, 07:20 PM Reply Like
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