San Francisco based Diamond Foods Inc has hit a deal with London-based private equity firm Lion Capital to buy potato-chip maker Kettle Foods for 402.3 million pounds. Kettle Foods was founded in 1978 and initiated UK production in 1989.

Lion Capital had acquired the business in 2006 in a deal worth 170 million pounds.

Commenting on the acquisition, Diamond Foods’ chairman Michael Mendes said, "By adding Kettle, including its talented team of employees, our snack business will have greater scale, which will help us to drive even greater innovation in the snack market.”

Diamond Foods is popular for its Pop Secret microwave popcorn and Emerald snack nuts in the US.

Currently, Kettle Foods’ Norwich plant provides work for as many as 407 people.

Diamond Foods Inc expects the transaction to close before the start of its next fiscal year in August 2010.