Del Monte agrees to $4B buyout

A KKR-led private-equity group will pay cash for the food processor.

By TheStreet Staff Nov 26, 2010 9:25AM

TheStreetDel Monte Foods (DLM) has agreed to be acquired for $4 billion in cash by a group of private-equity investors led by KKR (KKR).

 

The purchasing group, which also includes Vestar Capital Partners and Centerview Partners, will pay $19 a share for the San Francisco-based food and pet products company. The buyers will also assume about $1.3 billion in debt.

 

The purchase price represents a 6% premium to Del Monte's closing share price of $17.99 on Wednesday.

 

The stock surged Friday amid speculation that Del Monte would be acquired. Del Monte said the deal price represents a premium of about 40% over its average closing share price in the three months before Friday.

The deal is the largest private-equity acquisition of the year, ahead of Extended Stay, which in May agreed to a $3.92 billion buyout, The Associated Press reported.

 

Del Monte said it will keep its headquarters in San Francisco after the deal.

 

Under the agreement, Del Monte may solicit alternative proposals from other potential buyers through Jan. 8. The company said its board and advisers will seek other offers. If the company doesn't find a better bid, the KKR-led deal will probably close by the end of March, according to the news release.

 

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17Comments
Nov 26, 2010 6:44PM
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THis is a stock/business board...I thought you were talking about Bonds when you wrote coupons.

 

But since you are ...here is a simple explanation.  THe chains have pressed and threatened the suppliers for many years, competing with them with store brands.  Are you aware stores actually charge the suppliers to put products on the shelves...then demand advertising contributions from them (Slotting allowances, etc)  All this with constant demand for lower wholesale prices.  WalMart is Notorious for this playing the companies off each other.  So by the time that is all finished there is very little left, you don't see TV ads for most consumer products and foods anymore--maybe a coule weeks a year if they are lucky, most get no support at all.  What you used to get in a coupon is now already in the price, and coupons are quite expensive--the cost of distributing them, then the actual discoun, plus what stores get paid (read the print on the coupon) for redeeming them, then what the clearing house (like a bank for coupons) gets..add on misredemptions and fraudulent redemption and you begin ogetthe picture.  All in a format that only a small percentage of consumers even use...and man of them are coupon only buyers, the idea of a coupon/rebae/etc is to get you to try the product...then to buy  again without that.  Coupons are dying and will be relegated to the trading stamp/free dishes/etc scrapheap of history.  That dollar you got off cost the producer 3-4X that.  And on commodity type purchases it is useless from a profit perspective...yes companies exist to make a profit

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Well Kyill ...

I would think that you would want to give your family fresh fruit and vedgie intead of the canned wich as so many additives....

Just a thought..

Nov 29, 2010 11:04AM
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as noted in history...Japan owned a ton of US properties in the 70's, and we thought Japan would own us...China may want to revisit history...as for KKR it is just a profitable deal
Nov 28, 2010 4:20PM
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WARNING:

 

Are we being sold out! Maybe I'm wrong, but it seems to me at the rate were going in this great country, almost everything will be owned by 20 or 30 mega corporations and equity groups in like 10-15 years or so. It's frightening! It also seems like most of them will be based in other countries. How long before the USA becomes a third world country?  

Nov 27, 2010 8:58PM
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i work for delmonte foods lathrop califorina only west coast distribution center first delmont sold starkist to japanese cause they were worried about depleting ocean and tuna POPULATION NOT LASTING FOR ANOTHER TEN YEARS THERE BEING OVER FISHED SO DELMONTE SOLD STARKIST as for us employees still business as usual no changes in delmones products no jobs cut this company actually owend delmonte once before late 90s then sold it to heinz i believe now purchasing it back
Nov 27, 2010 8:45PM
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Like domino's all the large companies are being sold. Who and were are the buyers from? I like to try too purchase American Made products. Hope this is not another X on my list. I loved there canned goods.
Nov 27, 2010 3:18PM
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History Student 911 your name says it all; you need emergency help with history!!

As I was reading your comments I couldn't believe what I was reading. Basically I couldn't believe it because IT ISN'T TRUE!

Where do you get your info from... let me guess FOX?

I'd try and explain but I don't think it'll do any good.
(shaking head)




Nov 27, 2010 1:34PM
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Check your facts History Student, this 2008 story is completely untrue. Pelosi and her husband didn't then and don't now own any Del Monte or Starkist stock. American Somoa never got the minimum wage exemption that was sought by their non-voting representative Eni Faleomavaega and not by Nancy Pelosi. The truth is that Nancy Pelosi worked to prevent American Somoa and Starkist(which employs 75% on the American Somoan workforce and is owned by a Korean Company, not Del Monte) from receiving the exemption.
Nov 27, 2010 10:58AM
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hey fly,

 

First off why don't you learn how to spell on at least a third grade level before you make stupid comments. Secondly there is nothing wrong with making some spaghetti at home with canned sauce once in a while. Before you judge me on what i feed my family( which i do use plenty of salads and fruit at home from the local farmers market )take a good hard look in the mirror , you might just be suprised what you see!As far as DM leaving the country the article doesn't really give many specifics and is rather short and vague to make any real conclusions as to what the final outcome of the co. will be.But if i had ti guess it sounds like another american co. going elsewhere to save a buck .I'm sure a good old dose of greed , poor mangement , bad economy, bean counters and other financial factors had something to do with it.

Nov 27, 2010 8:28AM
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As a former employee of a company that was taken over by KKR, I feel sorry for Del Monte. KKR stripped the company of its most valuable assets by selling them off piece-meal, pocketing the profits, and leaving all the employees out in the cold. Once they acquire a company, it's the beginning of the end.
Nov 27, 2010 7:48AM
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How are these things paid for-- with efficiencies to be gained. More employee layoffs and then big payouts for the CEOs.
Nov 27, 2010 2:05AM
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Am curious if Del Monte is selling out to some foreign investor that will take more jobs to their country, impose their country's beliefs on the remaining USA employees, and see more layoffs, more American familes paid off, and help in bankrupting America, all for the good thing called money with no concern for those who worked there and made the company make money for so many decades, as well as the Americans who bought the food, and now, like so many businesses, could care less if America falls and americans starve? Like so many businesses have done.; And all the while all us Americans have lived comfortably and have done nothing but kick back w/ our apathy and complacency as america continues to fall into a black hole of being defeated by starvation- genocide. And think that that few billion dollars will make them a good and safe life somewhere on earth as it falls into the black hole as America is doing. It is happening and time , well way past time, for us to wake up, make the sacrifice, and do what we must to save our future, including Del Monte. Just read the history books instead f watching the ball games and get with the program so we and our childrens future isn't destroyed, instead of saying, well, I am all right and to heck with the rest of the world for it is about to crack anyway, so live for the moment as we all are going to he!! anyway attitude. It is the People who can save this nation by changing our way of thinking and stand up with one voice and save this nation, even if it means you can't buy a foreign TV, but a lower quality American made one, as well as companies be made to create the parts to make the TV by using American resources and do this with every business in this nation where the People can bring industry back. We have plenty of oil on our soil and the underwater oil wells to last 2000 years that we know about and that gives us time to go green at a pact that doesn't kill us all. 50 years should do it. and as for the greenhouse and melting glaciers, that no real scientist can say for sure it is our lifestyle that is heating up the place. And we can start recycling everything, and wealthy people can start businesses having a place where Americans can place all the assorted recycleables, instead of the one dumpster. There are a hundred thousand opportunities the American people can build, and the People can make a stand and insist that taxes be reasonable, for with the increase of industry the taxes will be there, social security can be saved, less welfare, everything can be made better if the People of the USA make a stand and comprimise their lifestyle, especially the rich, but even the poor can choose to buy more American by simply following one standard rule all should follow, if you can't buy it produced and made in America, if it is a want, then buy something else made in America, If not available yet, then in time we can. SO, is Del Monte going to sell us out like so many companies have? Like every credit card company, every internet service, everything, is hiring more people in other nations to save money while all in all, they are breaking the country completely and in the future, there will be no America. So if these companies don't bring back the businesses and jobs, then have more rich folk start a new business and all americans buy from them, TV, car with all American made parts, food, beds, everything. There are so much opportunity here in America, but only if it is made using American resources and made here in America and Americans get the wake up call and only buy American, and in a few short years America will be back to a strong nation. It is all in attitude, and standards. Look at Japan, they don't allow ant immigrants and they don't have a problem with jobs and overpopulation, like we do now because they learned from America when America was smart enough to realize this. When America is strong again, we can help other nations again, but not until we can help ourselves.
Nov 26, 2010 11:31PM
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 What you used to get in a coupon is now already in the price, and coupons are quite expensive--the cost of distributing them, then the actual discoun, plus what stores get paid.../RichNYC

As a former retailer you are only partially right.  As to what the stores get paid -8c- is peanuts when it comes to the HOOPS  you have to go through to redeem them. Especially if the employee is earning $$/hr.  Plus, you have to compile records to show the actual inventory orders and keep them handy for a year+.

 

Coupons will always be around as its the ONLY way to get non customers to try your product a first time, or reward a faithful customer.

 

Retailers get bonuses for letting a supplier have the ideal  shelf space:  EYE LEVEL and without competitors.

 

All in all, its to make up for  the loss of income in a tighter retail market.

 

I never worried about competitors and their pricing. I got customers with SERVICE and finding DEALS to suit their interests.

 

If you can not give your consumers a better deal then why waste peoples time for pennies off.../ unFLY

There are deals out there.  Its a matter of doing some groundwork on your part.   I found a grocery store mgr willing to give me a 25% discount if I bought case lots of my favorite canned  Tongue out HEALTHY Confused food: Allen Canned Kale.

 

Another store will get me  CASE LOTS when its on sale for half price.

 

Then there are wholesale distributors that will bend the rules in your area.

 

Nerd

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I agree with ya OGRE Alex..

whats with coupons these day the make ya have to buy say cat food buy 24 cans and save a 1.00

 

They cat food is 89 cents.

talk about greedy.

If you can not give your consumers a better deal then why waiste peoples time for pennies off when it should be dollars off.

Companies could aford it in the 70s why so greedy today....

I see yep as usual its all about unions and healthcare....

Maybe not?

Nov 26, 2010 11:58AM
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I gave up on DM mostly because their coupons  required multiple purchases to get an amount off that made it not worth bothering with.

 

If I want quality, I prefer S&W!

Nov 26, 2010 11:50AM
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i get the del monte meat tomato sauce at the dollar store in 20 some ounce cans and it is a great all natural product.even my picky wife likes it.i buy a box of columbia durham wheat spaghetti and feed the family for 2 bucks.if i get real ambitious i go to dominicks to the bargain meat section and get some tyson turkey and pork meat balls for an extra buck. 

Nov 27, 2010 11:55AM
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Isn't this wonderful? With this buyout, regardless of whether or not it is economic, we have just written a check ( huge profit) to none other than Nancy Pelosi. That lovely speaker of the house who has single handedly, ruined our economy and possibly our economic system. This all done in self dealing from the capitol building.

Henry, is a very wise investor and always buys value, However, the unintended consequences are to enrich one of the wealthiest women in the U.S. This woman made sure that her investment was a success by issuing programs  for the benifit of Del Monte in American Samoa. Nice, huh?  A woman who is one of the most arrogant, vicious people in America, second only to George Soros. She has sought to impose her will on the American people whether they want it or not.

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