A reverse Morris Trust transaction is an M&A strategy for a company to essentially sell assets without incurring any corporate tax, whereas typical deal structures would be taxable to the seller. As a first step, P&G transferred all assets that comprise the target snack business to a stand-alone subsidiary named The Wimble Co. (see the Separation Agreement filed as Exhibit 2.2 to the Diamond Foods Form 8-K on 4/5/11). P&G was represented by Jones Day of New York in the separation agreement, and Diamond by the San Francisco office of Fenwick & West LLP.
On June 20, Wimble Co. registered common shares for the purpose of its split-off from P&G (333-175029). The combination Form S-4/Form S-1 is comprised of an offer by P&G to exchange all Wimble common shares that are owned by P&G and will be converted into Diamond Foods common shares for P&G common shares that are validly tendered. Prior to the distribution, and in partial consideration for the assets of the Pringles snack business transferred from P&G, Wimble will be recapitalized and will borrow funds to distribute to P&G or its affiliates.
Immediately following consummation of the exchange offer, Wimble Co. ("the Pringles Co.") will merge with and into a direct wholly owned subsidiary of Diamond Foods. Each Wimble common share will be automatically converted into the right to receive one fully paid and nonassessable share of Diamond common stock. Diamond registered common shares for the merger on Form S-4 also filed on June 20 (333-175025). The shares of Diamond common stock issued in connection with the conversion of shares of Pringles Co. common stock in the merger will represent approximately 57% of the shares of Diamond common stock that will be outstanding immediately after the merger.
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