SAN FRANCISCO and CINCINNATI — Diamond Foods Inc. and Procter & Gamble Co. have entered an agreement to merge P&G’s Pringles snack chip business into Diamond in a $2.35 billion deal.

Diamond Foods Inc. and Procter & Gamble Co. have entered an agreement to merge P&G’s Pringles snack chip business into Diamond in a $2.35 billion deal.

According to the companies, the transaction will make Diamond the No. 2 global player in savory snack category.

Diamond said Tuesday that the addition of Pringles will more than triple the size of its snack business and increase scale in the U.S. grocery, mass merchandise, drug and convenience channels; more than double its snack sales in the United States and United Kingdom, Pringles’ two largest markets; and provide a broader global manufacturing and supply-chain platform, with access into key growth markets around the world, including Asia, Latin America and Central Europe.

"Pringles is an iconic, billion-dollar snack brand with significant global manufacturing and supply-chain infrastructure," stated Michael Mendes, chairman, president and chief executive officer of Diamond Foods. "Our plan is to build upon the brand equity Pringles has established in over 140 countries. This strategic combination will create an independent, global leader in the snack industry with a focus on quality and innovative products. Not only is this combination immediately accretive, it also creates a platform that we believe will allow us to build shareholder value for years to come."

According to the two companies, Pringles is the world’s largest potato crisp brand. Pringles will join Diamond’s portfolio of brands, which include Diamond of California and Emerald nuts, Pop Secret microwave popcorn and Kettle Brand potato chips, creating a premium snack-focused company with total revenue of about $2.4 billion.

"We are confident Diamond Foods will be an excellent new home for our Snacks employees," commented Bob McDonald, P&G chairman, president and CEO. "This is also a terrific deal for our shareholders, maximizing value and minimizing earnings per share dilution."

The transaction is expected to be completed by the end of calendar 2011.