Diamond Foods Inc will buy Pringles from Procter & Gamble Co for $1.5 billion in stock, snagging a global brand that will more than triple the size of its snack foods business.

Pringles, known for its potato chips sold in more than 140 countries, will give Diamond a wider access to international markets and also more than double its sales in the United States and the UK.

Shares of Diamond Foods rose as much as 12 percent on Tuesday.

The deal, which follows Diamond's acquisition of snack foods brands such as Pop Secret popcorn and Kettle chips in the past few years, gives it a toehold in a fragmented market dominated by PepsiCo's Frito-Lay's snack business.

"It is still a fraction of Frito-Lay's snack business, literally about one-tenth of the size," said Janney Capital Markets analyst John San Marco.

"Aside from Frito-Lay, there are no other real true global powerhouses. Pringles is certainly in better strategic hands as part of a dedicated snack business."

The sale of P&G's last food brand frees up the household products company to focus on its cosmetics and healthcare units.

"I think it was as telegraphed as a transaction like this can be," San Marco said. "Pringles had been a bit of an orphan within Procter's household and personal care business."

Diamond sees net sales of about $1.8 billion in the fiscal year ending July 31, 2012, following the closing of the deal, expected by end 2011.

P&G will split off the Pringles business and combine it with Diamond Foods, with P&G shareholders owning 57 percent of the new company and Diamond stockholders the rest. The new company will be led by Diamond's Chief Executive Michael Mendes.

"This announcement is not entirely unexpected, as there had been speculation ... that P&G would look to shed the Pringles business and its estimated $1.4-$1.5 billion in sales," Oppenheimer analyst Joseph Altobello wrote in a note to clients.

Diamond will also assume $850 million of Pringles debt and expects a one-time cost of about $100 million related to the transaction over the next two years.

Diamond Food shares were up 10 percent at $63.11 on Nasdaq in Tuesday morning trade, while Procter & Gamble shares were almost flat at $61.98 on the New York Stock Exchange.

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