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Actionable news in DMND: Diamond Foods, Inc.,

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Filed by Snyder’s-Lance, Inc.

Pursuant to Rule 425 under the Securities Act of 1933

and deemed filed pursuant to Rule 14a-12

of the Securities Exchange Act of 1934



Mark Carter Snyder's-Lance, Inc. - VP & IR Officer

Carl Lee Snyder's-Lance, Inc. - President & CEO

Rick Puckett Snyder's-Lance, Inc. - EVP, CFO & Chief Administrative Officer


Brett Hundley BB&T Capital Markets - Analyst

Jonathan Feeney Athlos Research - Analyst

Amit Sharma BMO Capital Markets - Analyst

Akshay Jagdale Jefferies & Co. - Analyst



Good day, ladies and gentlemen, and welcome to Snyder's-Lance special conference call.

(Operator Instructions)

As a reminder this conference is being recorded. I would like to introduce your host for today's conference, Mr. Mark Carter, Vice President of Investor Relations Officer. Sir, you may begin.

Mark Carter - Snyder's-Lance, Inc. - VP & IR Officer

Thank you, Tyrea. And good morning, everyone. With me today are Carl Lee, President and Chief Executive Officer, as well as Rick Puckett, Executive Vice President, Chief Financial Officer and Chief Administrative Officer of -Snyder's-Lance, Inc.

During today's call, we will discuss our recently announced signing of a definitive agreement to acquire Diamond Foods, Inc. We will also discuss our 2015 third-quarter results, as well as estimates for the balance of 2015 and estimates for full-year 2016. As a reminder we're webcasting this conference call including the supporting slide presentation on our website at Snyder'

Before we begin I would like to point in that during today's presentation management may make forward-looking statements and other projections about our Company's performance. Please refer to the Safe Harbor language that is included in each of our press releases and presentations.

I'll now turn the call over to Carl Lee, President and Chief Executive Officer, to begin management's comments.

Carl Lee - Snyder's-Lance, Inc. - President & CEO

Thank you, Mark. Good morning, everyone. We really appreciate you joining us today. And we realize that it was a short notice but we are very excited to be able to share some important news for our Company as we spend the next hour together.

If you would turn to page 2, I'd like to bring your attention to what Mark just mentioned. We are very excited about announcing a powerful combination of two very innovative, very much on-trend snacking platforms to be able to combine to really be able to serve our customers, consumers and shareholders better.

Over on the left you see our five core brands at Snyder's-Lance -- Cape Cod, Snyder's of Hanover, Lance Sandwich Crackers, Pretzel Crisps, and our latest addition, Late July, which continues to do extremely well. Combining that with the outstanding portfolio that Diamond has assembled really creates some competitive advantages for us a very competitive category. If you take a look at Diamond's brands, it starts with their Diamond culinary nuts, Emerald snacking nuts, Pop-Secret popcorn, the Kettle brand here in the US, and Kettle chips in the UK.

It allows us to really combine two very important portfolios in a very competitive snacking category, the category where we see new companies and new brands basically enter almost every day. And with this new scale we're going to be a much more competitive and have the ability to serve, again, customers, consumers and shareholders even better.

If you turn to page 3, this transformational combination will leverage strong branded portfolio and the complementary assets and capabilities that we are able to bring together. While both companies are good players in the overall snacking space we really are very different in our profile and different in our consumer base and different in a lot of other ways.

First of all, Snyder's, a national branded company supported by DSD and our direct sales force, with some really strong innovation capabilities. We really are a pure play in snacking in the fact that we only focus on snacks day in and day out. In fact, it's our passion. We really focus on mainstream and a very growing and successful better-for-you portfolio.

We have strength in traditional grocery, mass merch, and the convenience store channels. We have a DSD organization that we are very proud up, with over 3,000 IBOs and a direct selling force that supports them day in and day out. We have a very strong direct sales team that has great relationships in the deli and alternative channels.

If you take a look at the right side and characterize some of Diamond's abilities and skills, truly a national brand, as well, but also has that international distribution, which is a great opportunity. And has an even stronger better-for-you portfolio and better-for-you positioning and capabilities. Also, nationally recognized.

And with the culinary advantages, as well, with Diamond create some very unique opportunity as a portfolio. Their better-for-you positioning is even stronger than ours. And their R&D capabilities are very solid and have developed some really truly unique products that have created some interesting consumer trends or addresses those consumer trends.

Their strength really lies in the natural channel where they do extremely well. Club and better-for-you supermarket sections are also where you will find them across the US. Their international presence, again, is very important, with manufacturing and full-scale operation there in the UK also serving Western Europe. They utilize a direct distribution model and third-party distributors to deliver their products to supermarkets and many channels across the US.

If you would, follow me to page 4. A financially compelling transaction which really create significant and lasting shareholder value with the combination of our shareholders. Let's talk a little bit about the details of the transaction.

It will be a cash and stock offer to acquire Diamond Foods. And based on the recent close, that would be about $40 in value. The offer consists of issuing 0.775 shares of Snyder's-Lance for each share of Diamond outstanding. We will continue to pay our $0.64 dividend on the expanded number of shares that will be outstanding. And in addition there is a $12.50 cash payment per share for each of the Diamond shares. As we bring these two organizations together current Snyder's-Lance shareholders will own about 74% of the Company and our new addition Diamond shareholders will own about 26%.

Taking a look at the capital structure, we will have an investment grade capital structure for long-term sustainability. We will be refinancing the Diamond debt investment grade rates. We will issue new term loans to fund the cash payment. And leverage ratio will be 4.3% or 4.3 times EBITDA on day one and that is pre-synergies.

The good news is we will be able to pay down our debt very quickly and by 2017 we are expecting to be down to 3X on our EBITDA or our debt ratio. Again, our strong balance sheet allows us to do this transaction. And we will be able to get a very strong balance sheet again very quickly with the debt paydown that we will be able to accelerate over the next couple of years.

If you will, join me on page 5. A financially compelling transaction that, again, will really create lasting shareholder value for the combination of our shareholders. We have worked very diligently and dug very deeply to make sure that we've got a strong estimate on the overall cost savings and synergies. Our cost savings will be over $65 million and we expect another $10 million in savings that we're going to be able to reinvest in brand building activities to continue to grow our top line.

So, we are looking for over $75 million in savings with some of it being reinvested in our brands. We expect it to be accretive to Snyder's-Lance EPS year one. Another advantage are the NOLs that will transfer and provide value of about $110 million, which will be important that we will use over the first couple of years.


The transaction value, when you roll it in, is $1.9 billion. That includes covering the current debt that Diamond has on their balance sheet. Going in, the multiple is about 15 times 2015 EBITDA without synergies, and if you include the synergies it will be down below 10 at 9.5.

If you join me on page 10, the transaction, in our opinion, has very strong strategic rationale on many fronts that are important for us to now talk about. Obviously there will be some scale in purchasing and logistics with our new broader scale, new capabilities. We're going to be able to leverage our purchasing power and also really be able to make our overall distribution and logistics organizations even more efficient.

We expect scale in both administration and manufacturing to drive further synergies. One thing that is also is very important, as I mentioned earlier with our different customer base and different consumer base, it's going to allow us to reach additional retailers and consumers in the natural and traditional channels. It also affords the opportunity for international expansion that we will be able to strategically go after in due course and due time. And obviously it expands our better view capabilities to really continue to address what consumers are looking for today, as we leverage their innovation capabilities, which are outstanding, and also combine it with ours to continue to unlock some very important growth in the snacking categories.

On page 7, we will talk a little bit more about the synergies and what makes those that. First of all, we mentioned the administration and manufacturing. One thing that I'm very impressed with is best practices at Diamond. There team, their leadership, their skill set, the organization is a very talented and very successfully-run company, with a great leadership team that has really developed some great innovations and some great best practices that we are going to be able to use at Snyder's-Lance.

We will also have some best practices to share with them and that's going to create some real advantages for our new combined company. We will also be able to streamline some of our back office operations. And obviously we'll be able to improve productivity across all of our supply chain and across all of our operations.

Shipping and distribution is another area of significant savings as we combine our companies. We will be able to optimize our freight lane costs and continue to drive down our cost and improve there. We will be able to unlock some warehouse efficiencies where we have some duplication. We'll also be less reliant on LTL shipments with larger scale as we ship more full trucks across the US.

Procurement is another area. We've got some additional volume there to create value, both for ourselves and our suppliers. by cooperating with them and working with them closely we should build some real advantages for both our important suppliers and ourselves. And, once again, combining best practices is going to allow us to be able to much more efficient across our supply chain and, in particular, in procurement.

As I mentioned earlier we are looking for $75 million in annualized synergies. 50% of that should be expected in 2016 subject to when we close, and in full synergies should be realized by 2017. We are expecting to invest $10 million of that back into brand building. So, if you would, think about $65 million in savings and $10 million in reinvestment.

Page 8 will give you the overall coverage of our plans. One thing that's very important here for us is we're going to have a much stronger West Coast presence with our plants. If you take a look at the Kettle plant in Salem, Oregon and the Diamond plant in Stockton, California, that will be two additional manufacturing and operating locations for us in over on the West Coast combined with our Goodyear plant that's there in Arizona today.

A Kettle plant also in Beloit, Wisconsin is an important and strategic location for both sourcing potatoes and also servicing the very important and growing Midwest. And then the Pop-Secret plant, will all join the US operation that we have in the United States. And then Kettle Chip, with their operation there in the UK, again provides a full-fledged operation with sales, marketing and manufacturing based in the UK, serving the United Kingdom but also Western Europe.

Turning to page 9, we believe the combination will really allow us to continue to build our better-for-you portfolio. As most of you know, we are seeing significant growth in better-for-you snacking. We're also seeing growth in indulgent snacking. So, there is an opportunity for us to continue to grow and expand there.

If you look at the left-side of the page you see some of the important categories and brands we have today with our whole grain Lance Sandwich Crackers, or our organic and non-GMO Late July tortilla chips, and our gluten-free offerings, as well. But I'm really excited to be able to talk about non-GMO Kettle chips and their all-natural positioning, really something that sets them apart and gives them a very important way to serve their consumers in the natural channel and in all the retailers that they are currently distributed in. Coming soon will be the Emerald nut line being converted to non-GMO, and be able to continue to emphasize the protein benefit of the overall nut category.

Just again, some of the important synergies and some of the important savings will be the international expansion opportunity that affords us with our broader portfolio and some additional ways to ship products into those important markets. Natural channel continues to grow and expand. And that will be one area for us to continue to leverage the benefits of the two companies combined. Food service is also interested in better-for-you snacking and will be positioned well to continue to provide their needs.

Multipacks is another interesting area where more people are looking for single-serve sizes but wanting to buy them in the convenience of a 20 or 24 count. That's another opportunity for us to continue to leverage our better-for-you positioning and combine brands and combine snacks. E-commerce is a growing business for both of our companies and together we will be able to service that channel even better.

Turning to page 10, it truly is a powerful combination that really provides some significant and long-term shareholder value creation. And just to highlight some of it, first of all, combined we will be a $2.6 billion sales company. As I mentioned earlier, we are looking for $75 million in synergies that we will have in our P&L by the end of 2017, with significant EPS accretion.

Obviously it expands our revenue opportunities and our reach opportunities with our customer base. And obviously we have a very favorable financing structure and, more importantly, a strong balance sheet and a chance to continue to look at acquisitions as we pay down our debt very quickly.

In closing on the comments about the Diamond combination, and our excitement about this new opportunity to work together with their team to expand the reach of our snacks, a couple things to just mention as we close this part of the discussion. Obviously it's subject to both the Snyder's-Lance and the Diamond shareholders approving it. And obviously there's some additional closing conditions around regulatory approval and other things that we're going to have to go through. So, be patient with us as we work very quickly and efficiently towards the closing. And we will be glad to keep you posted on that. Meanwhile, we are two individual companies and we will continue to operate separately and make sure that we honor our obligations to everyone that is counting on us today.

If you would, let's turn it over to third quarter. Obviously we had planned two weeks from today to talk about our third quarter. I'm excited to talk about the combination with Diamond and also to bring you an update on our third quarter and roll out those numbers and share with you where we are.

Let's turn to page 13, if you would, please. We did run into some headwinds in Q3. It was around our revenue. And as we talk about our numbers and talk about our results you will see the impact on our overall EPS.

Many companies are talking about the headwinds with revenue. Many companies are talking about the difficulties with their categories. I think that that is true for us but we are uniquely different when it comes to that. Even with our overall challenges we delivered 4.7% revenue growth. 4.7% revenue growth is outstanding in the conditions that we all face today.

My disappointment, however, it was lower than what we had planned and lower than what we expected. So, as a company we are outperforming our categories and we are performing very well across all of our core brands. 4.7%, again, very significant overall growth. And we are seeing it across the board through ACV gains, velocity and overall better take off the shelf from our consumers. But, again, it was below our expectations, but again also very solid.

Cape Cod continues to benefit from our Western expansion and continues to see very strong growth from our consumer brands and consumer franchise that continues to expand. Snyder's of Hanover continues to grow, and outpaced our peers and our competitors. Late July continues to leverage our DSD network to expand their distribution, and continued to deliver very outstanding growth. Snack Factory is leveraging their strong deli relationships to drive incremental growth. And then Lance Sandwich Crackers is benefiting tremendously from the repositioning that we've talked about for quite some time.

One important thing to mention, all...