Diamond Foods to Pay $11 Million to Settle Investor Suit
By Sophia Pearson – Aug 21, 2013 10:07 AM ET
Diamond Foods Inc. (DMND) agreed to pay $11 million in cash to settle a class-action lawsuit over accounting errors that led to earnings restatements and ended its bid for the Pringles potato-chip brand.
Diamond also will issue 4.45 million common shares to a settlement fund to resolve claims on behalf of investors who bought stock from Oct. 5, 2010, to Feb. 8, 2012, the San Francisco-based company said today in a statement. Diamond denied all claims of wrongdoing or liability in the suit, which targeted the snack-and-nut company and two former officers.
“We believe this proposed settlement eliminates the burden of further time, expense and risk related to the class action,” Chief Executive Officer Brian J. Driscoll said in the statement. The accord is valued at $96.1 million based on Diamond’s closing share price yesterday, according to court documents filed today.
In February, a Delaware judge threw out an investor suit against the company brought by a retirement fund for Hialeah, Florida, employees, saying their claims should be decided by a court overseeing a similar case in California. The retirement fund had blamed directors for Diamond’s inability to file its financial statements and derailing its planned $2.4 billion acquisition of Procter & Gamble Co.’s Pringles division.
Diamond rose as much as 20 percent after giving a fiscal fourth-quarter sales outlook that exceeded estimates. The shares climbed 17 percent to $22.31 at 10:06 a.m. New York time in Nasdaq Stock Market trading.
A portion of the $11 million settlement announced today will be funded by Diamond’s insurers, the company said. The accord is subject to court approval.
The case is In Re Diamond Foods Inc. Securities Litigation, 11-cv-05386, U.S. District Court, Northern District of California (San Francisco).
To contact the reporter on this story: Sophia Pearson in Philadelphia email@example.com
To contact the editor responsible for this story: Michael Hytha at firstname.lastname@example.org