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Diamond Foods: Takeout in Aisle Three?

Source: Kettle Chips

Nuts, popcorn, chips, and an acquisition? That's what some shareholders see in Diamond Foods.

When the nuts and snacks company reported earnings after the bell on Monday, the numbers didn't exactly leave a good taste in investors' mouths. Shares of Diamond Foods are higher Wednesday, but they dropped 10 percent on Tuesday

Perhaps the plunge is just one more reason why a takeout of Diamond—known for their Kettle Chips, Emerald Nuts, and Pop Secret brands—could be around the corner.

Acquisition talk has long surrounded this company. In 2011, they were on a major hot streak, and set to acquire Pringles from Procter & Gamble, before they were rocked by a multi-year accounting scandal. The Pringles deal fell through, and Kellogg ended up snatching up the chip maker.

Then, investors started to figure that Kellogg might look to pick up Diamond, too. Kellogg CEO John Bryant made waves when he told Reuters in February 2012 that Diamond is "clearly a fit in the portfolio," and added that "our ability to do bolt-on acquisitions has probably expanded with the addition of [Pringles]."

So does Diamond still look like a target?

Absolutely, said analyst Tim Ramey, who covers both companies for D.A. Davidson. "I doubt that John Bryant would view it any differently today," Ramey said. "An acquisition still makes sense for Kellogg."

SunTrust analyst William Chappell agrees that a Diamond acquisition could be around the corner. In a note published on Tuesday, Chappell wrote, "Due to the consumer awareness and favorable positioning of its snack brands, Diamond Foods could be an attractive takeout candidate for a larger food company."

And at what price would this acquisition happen? Chappell noted, "Based on recent comparable food takeout multiples, we would expect the takeout price to be higher than our target price of $15."

Perhaps options traders also think that a deal offer is coming. Nearly twice as many calls as puts were traded in the name yesterday—indicating that despite the drop, plenty of people were making bullish bets.

This must be music to Diamond investors' ears. Since it hit an all-time high 16 months ago, the stock has plummeted a gut-wrenching 82 percent.

The good news? An acquisition that would have once looked like a three-course meal to Kellogg could now be, well, a tasty snack.

Neither Diamond Foods nor Kellogg responded to requests for comment.

—By CNBC's Alex Rosenberg

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