Pet and consumer foods manufacturer Del Monte Foods Company has agreed to $5.3 billion acquisition proposal by a group of private equity firms including Kohlberg Kravis Roberts & Co (KKR).
KKR along with Vestar Capital Partners and Centerview Partners have offered $19 a share in cash for the food company, Del Monte said in a press statement. The transaction, which was unanimously approved by Del Monte's board of directors, is valued at about $5.3 billion, including assumption of $1.3 billion in net debt.
The price represents a premium of about 40 per cent over Del Monte's average closing share price during the past three months prior to November 18, 2010.
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 $1 billion consumer foods business into a branded pet and consumer products company, with more than $3.7 billion in revenues," Del Monte Foods Chairman and CEO Richard G Wolford said.
The deal, which is subject to regulatory approvals, will be closed by the end of March 2011.
Del Monte plans to maintain a corporate presence in both the San Francisco Bay Area that houses its headquarters, and Pittsburgh. Barclays Capital Inc has acted as financial advisor to Del Monte Foods and Gibson Dunn & Crutcher LLP served as legal advisor to the company.
The private equity firms have secured financing from Bank of America Merrill Lynch, Barclays Capital Inc, JPMorgan Chase, Morgan Stanley and KKR Capital Markets LLC.