KKR-led Group Acquires Del Monte Foods in $5 B Deal
Putting to rest weeks of speculation, consumer products and pet foods maker Del Monte Foods Co. agreed to be acquired by an investor group affiliated with Kohlberg Kravis Roberts & Co. L.P. (KKR) in a deal valued at approximately $5.3 billion, including the assumption of approximately $1.3 billion in net debt.
KKR, Vestar Capital Partners and Centerview Partners will pay a premium price of $19 per share for the San Francisco-based company. The share price represents a premium of approximately 40 percent over Del Monte’s average closing share price during the past three months prior to November 18, 2010, when market rumors of a transaction began, and is also higher than any price the company's stock has ever achieved.
With a powerful portfolio of brands, some of Del Monte’s leading nonfood pet brands include Meow Mix, Kibbles 'n Bits, Milk-Bone, 9Lives and Gravy Train, as well as its leading food brands such as Del Monte, Contadina and College Inn, among others, in addition producing and distributing an array of private label pet products and food products.
“This transaction delivers substantial shareholder value and is a clear endorsement of Del Monte's strategic success and effective execution,” said Richard G. Wolford, chairman and CEO of Del Monte Foods. “The hard work and dedication of our talented team has helped to transform Del Monte from a $1 billion consumer foods business into a branded pet and consumer products company with more than $3.7 billion in revenues.”
Wolford added that the transaction “will enable our company to continue to successfully grow, building on the foundation our team has put into place. We are excited about the ability to deliver substantial returns to our shareholders, as well as great prospects for Del Monte employees, customers and consumers.”
Simon Brown, member of KKR and head of the firm's North American Consumer practice, praised Del Monte’s “first-rate brand portfolio and excellent reputation for providing high quality and nutritious products to families and their pets. We look forward to working with the company’s talented employees and investing in the business as we continue to execute upon Del Monte’s proven strategy for growth. Del Monte is a great company, with an excellent strategy, a talented team and a strong future.”
Del Monte plans to maintain a corporate presence in both the San Francisco Bay Area and Pittsburgh, with its corporate headquarters continuing to be located in San Francisco.
Under the terms of the deal, Del Monte is allowed to solicit alternative proposals through Jan. 8, 2011. The company said it will "actively" seek other suitors, but if no "superior offer" is found the deal announced Friday is expected to close by the end of March 2011, subject to customary closing conditions, including receipt of shareholder and regulatory approvals. Del Monte does not intend to disclose developments with respect to the solicitation process unless and until the board has made a decision.
In related news, Coral Gables-based Fresh Del Monte Produce Inc. is not affiliated with the deal, which it said “will have no impact whatsoever on Fresh Del Monte Produce as the two companies are…totally separate…and are not associated in any way. Fresh Del Monte Produce Inc. is not affiliated with Del Monte Foods. Fresh Del Monte Produce Inc. has the exclusive rights to use the Del Monte trademark worldwide for fresh produce without exception, in addition to all prepared food products in Europe, Africa, the Middle East and the countries formerly part of the Soviet Union. We would further add that the signed agreement by Del Monte Foods.”