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Del Monte Foods Co. sold for $5 billion

Nov. 28, 2010

In one of the tastiest buyouts of the year, San Francisco-based Del Monte Foods Co., whose sales have more than doubled since 2006 due primarily to pet food acquisitions, agreed to be acquired for more than $5.3 billion including debt, by buyout firm Kohlberg Kravis Roberts & Co. (KKR & Co.). That translates to about $19 a share, more than expected on the street, and represents a 5.6 percent premium over Del Monte's Wednesday closing stock price of $17.99.

Toops Scoops

This isn't the first time Del Monte and KKR have been linked together. After the private equity firm's $25 billion buyout of RJR Nabisco two decades ago, KKR sold the Del Monte canned-foods business to an investor group led by Merrill Lynch. Del Monte is particularly attractive because of its pet food business.

Vestar Capital Partners and a fund run by Centerview partner James Kilts, who successfully integrated the Kraft and General Foods divisions within the Philip Morris Cos, joins KKR in the deal to pay off Del Monte's $1.3 billion in debt.

Maker of a wide range of products under the brand names of Del Monte (fruits and vegetables), S&W, Contadina, Kibbles n' Bits, 9-Lives, Pounce, and Milk Bone, the venerable company was founded in 1916 as California Packing Corp., or Calpak, and was renamed Delmonte Corp. in 1967.

The pet-food industry has been consolidating, reports Bloomberg. Nestle SA purchased dog-snack maker Waggin' Train LLC from private equity firm VMG Partners in September, and Natura Pet Products was acquitted in May from Procter & Gamble Co., whose pet-food brands include Iams and Eukanuba.