BOSTON, Nov. 3, 2011 /PRNewswire/ -- Block & Leviton LLP, (www.blockesq.com) a Boston-based law firm representing investors seeking to recover money lost due to investment fraud, is investigating possible securities fraud claims involving Diamond Foods, Inc. (NASDAQ: DMND) ("Diamond" or the "Company").
The investigation commenced on November 1, 2011 when the Company announced that it was postponing a potential $2.35 billion acquisition of Pringles, a Proctor & Gamble subsidiary, to allow Diamond to complete an internal accounting investigation. A Company press release stated that Diamond's Audit Committee Chairman received a communication from outside the Company questioning the timing of certain payments to walnut growers. The payments were allegedly timed to make 2011 fiscal year costs appear lower than they actually were. One source estimates that the payments were worth as much as $50 million and would have reduced Diamond's operating income by more than 50%, if they had been included in the fiscal year ended July 31, 2011.
On the next trading day following the November 1, 2011 announcement, the Company's stock fell nearly 18% to close at $52.79, down $11.33 from the previous day's close of $64.12. These events may have further ramifications for the Company due to the terms of the proposed Pringles transaction, which contemplates Diamond using its stock, and acquiring a certain amount of Pringles debt, in order to fund the acquisition. According to sources, the amount of debt Diamond is required to take on could jump from $700 million, if Diamond's stock is trading above $56.62 per share, to over $1 billion, if its stock is trading below $44.61 per share.
If you purchased or acquired Diamond's securities within the last year and are interested in learning more about your legal options, or if you have any information regarding these matters, please contact Block & Leviton.
Block & Leviton is a Boston-based law firm representing investors for violations of securities laws. The firm's lawyers have collectively been prosecuting securities cases on behalf of investors for over 40 years.
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SOURCE Block & Leviton LLP