Diamond Foods Inc. is acquiring the Pringles potato crisp brand from Procter & Gamble Co. in a $1.5 billion stock transaction designed to minimize the tax bite.

The deal, in which Diamond will assume $850 million of Pringles debt, will catapult the maker of Emerald nuts, Pop Secret Popcorn and Kettle Brand chips into the second-largest global snack company behindPepsiCo Inc., owner of Frito-Lay brands.

The deal will be structured to minimize the tax impact to P&G shareholders, who can elect to exchange P&G shares for Diamond shares. P&G will set up an entity to own the Pringles business, and merge it with Diamond. P&G shareholders will own 57% of the combined company.

With Pringles, Diamond will more than triple the size of its snack business–which it doubled just last year with its $615 million acquisition of premium potato-chip maker Kettle Foods.

It also helps P&G trim another non-core business from its portfolio, which is increasingly focused on personal-care and household-product brands.

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