Kohlberg Kravis Roberts & Co. (KKR), Vestar Capital Partners and Centerview Partners have signed a definitive agreement to acquire Del Monte Foods for $19 a share, or about $5.3bn including debt, Del Monte has said.
The transaction includes the three investment firms taking on about $1.3 billion in net debt, and Del Monte said the price is about 40 percent more than its average closing share price over the three months prior to November 18, 2010, when market rumors of a transaction began, and higher than any price that Del Monte stock has ever achieved.
Chairman and CEO of Del Monte Foods Richard Wolford said in a statement: "This transaction delivers substantial shareholder value and is a clear endorsement of Del Monte's strategic success and effective execution. The hard work and dedication of our talented team has helped to transform Del Monte from a $1bn consumer foods business into a branded pet and consumer products company with more than $3.7bn in revenues. This 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."
The agreement allows Del Monte to seek a higher offer until January 8, 2011 and the company said its board of directors and advisors will actively solicit acquisition proposals during this period. If no higher offer is found, the KKR/Vestar/Centerview acquisition of Del Monte Foods is expected to be finalized by the end of March, 2011, subject to usual conditions.
The company said it would not discuss the solicitation process unless and until the board makes a decision.
Member of KKR and head of the firm's North American consumer practice Simon Brown said: "Del Monte has a 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 Foods said it plans to remain in both the San Francisco Bay Area and Pittsburgh, and its corporate headquarters would remain in San Francisco.