SAN FRANCISCO (AP) — Diamond Foods Inc. is buying Procter & Gamble Co.'s Pringles chips business in a deal valued at $1.5 billion.

Analysts have been speculating for years that Procter & Gamble might shed Pringles, as the world's biggest consumer products maker had indicated in the past that the food business didn't fit in with the rest of its portfolio.

Diamond, whose products include Emerald nuts, Pop Secret microwave popcorn and Kettle Brand potato chips, said Tuesday that the transaction will more than triple the size of its snack business and help bring its total annual revenue to about $2.4 billion.

The San Francisco company's stock gained $4.99, or 8.7 percent, to $62.21 in premarket trading.

"Pringles is an iconic, billion dollar snack brand with significant global manufacturing and supply chain infrastructure," Diamond Chairman, President and CEO Michael J. Mendes said in a statement.

Diamond, which concentrates on snack foods, says the addition of Pringles will more than double its snack sales in the U.S. and U.K., which are Pringles' two biggest markets. It will also give Diamond a greater presence in U.S. grocery, drug, mass merchandise and convenience stores.

The Pringles brand is more than four decades old, and is sold in more than 140 countries, with manufacturing plants in the U.S., Europe and Asia.

In recent years, P&G has sold Folgers coffee, Jif peanut butter, Crisco shortening and Sunny Delight drinks, leaving Pringles as the last major food brand for the Cincinnati consumer products company. Its other products include Tide detergent and Gillette shavers.

The deal includes $1.5 billion in Diamond stock and the assumption of $850 million of debt. The combined business, whose headquarters will stay in San Francisco, will be led by Mendes. P&G shareholders will get about 57 percent of outstanding shares of the combined company, while Diamond shareholders will own about 43 percent.

Procter & Gamble said the Pringles deal will likely be part of a "split-off" transaction in which stockholders can choose to take part in an exchange offer, swapping Procter & Gamble shares for Diamond stock.

A collar mechanism being implemented may also adjust the amount of debt that Diamond assumes. The debt amount could increase by up to $200 million or be reduced by up to $150 million based on the mechanism.

The deal will give Procter & Gamble a one-time earnings boost of about $1.5 billion, or 50 cents per share.

If the Pringles transaction closes before the end of the year, Diamond anticipates fiscal 2012 earnings per share between $3 and $3.10 per share on revenue of about $1.8 billion. The forecast is prior to accounting for costs associated with the Pringles deal.

Diamond expects about $100 million in one-time costs tied to the Pringles transaction over the next two years.

The transaction, which still needs Diamond stockholder approval, is expected to close by the end of the year.