Federal prosecutors have launched a criminal inquiry into Diamond Foods's walnut payments, an action that could throw its pending purchase of Pringles from Procter & Gamble Co into doubt, the Wall Street Journal reported, citing people familiar with the matter.

News of the Justice Department inquiry sent shares down more than 10 percent to $29.53 in after hours trading on Thursday.

Diamond (DMND.O) has been besieged with questions about whether it delayed payments to farmers to make its earnings for the fiscal year ended July 31 look better while it negotiated to buy Pringles from Procter & Gamble (PG.N).

The snack maker's accounting of payments to walnut growers is already the subject of an internal company investigation and a probe by the U.S. Securities and Exchange Commission. Prosecutors in the San Francisco U.S. Attorney's office are coordinating with the SEC, according to the Journal's report.

The seller of Emerald nuts, Kettle potato chips and Pop Secret popcorn had agreed to buy the Pringles snack food brand in April. The two companies have since delayed the $1.5 billion acquisition due to the accounting questions.

Diamond spokeswoman Lucy Neugart said the internal investigation is ongoing and that the audit committee anticipates completing it by the middle of February.