(Reuters) – Diamond Foods Inc removed top management after a probe by its audit committee found that the company improperly accounted for payments to walnut growers, sending its shares down 40 percent in after-hours trading.
The company, maker of Emerald nuts, Kettle chips and Pop Secret popcorn, also said that earnings for its 2010 and 2011 fiscal years will need to be restated to account for the payments.
The result of the investigation and share drop has thrown into doubt the company’s deal to buy the Pringles potato chip business from Procter Gamble Co., which was to be paid for with Diamond shares.
“There’s a very, very low chance of the Pringles (deal) happening now,” said a Diamond investor who declined to be identified due to the sensitivity of the issue.
Chief Executive Michael Mendes and Chief Financial Officer Steve Neil have been placed on administrative leave, the company said in a statement, adding that it was seeking permanent replacements for the two men.
Diamond named director Rick Wolford as acting chief executive and Michael Murphy
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