Del Monte, Barclays Capital agree to pay US$89.4M to settle shareholder lawsuits over food maker's sale earlier this year to investor group
October 6, 2011
– Del Monte Corp. and Barclays Capital Inc. have agreed to pay $89.4 million to settle shareholder lawsuits over the food maker's sale earlier this year to an investor group led by Kohlberg Kravis Roberts & Co.
Under the terms of the proposed settlement filed Thursday with the Delaware Chancery Court, Del Monte agreed to pay shareholders $65.7 million in cash. Barclays, which served as Del Monte's financial advisor in its buyout, agreed to contribute $23.7 million in cash toward the settlement.
The company's brands include Contadina tomato products and Kibbles `n Bits, Meow Mix and Milk-Bone pet foods.
Shareholders challenged the $4 billion buyout, claiming that the directors on the board of San Francisco-based Del Monte breached their fiduciary duty and misled investors when they put together the deal.
Investors also accused Barclays of having a conflict of interest because, in addition to advising Del Monte, the London-based bank provided some of the buyers' financing.
In February, Vice Chancellor J. Travis Laster in the Delaware Court of Chancery, determined that Barclays manipulated the sale process to boost its fees and colluded with the private equity firms, but he also faulted Del Monte for its handling of the deal.
Del Monte and Barclays denied any wrongdoing as part of the settlement, which Lester must still approve.
Robert Williams, administrator of the NECA-IBEW Pension Trust Fund in Decatur, Ill., which was the lead plaintiff, praised the agreement.
"We are proud to have obtained such a significant recovery on behalf of the hard-working members of the fund and the class as a whole," Williams said in a statement.
A Del Monte spokeswoman declined to comment Thursday. The company said in a regulatory filing that it agreed to the settlement "to eliminate the uncertainties, burden and expense of further litigation."
A call to KKR was not immediately returned. There was no answer at Barclays' London offices.
Investors led by KKR, Vestar Capital Partners and Centerview Partners agreed in November to buy the food maker for $19 per share and to assume $1.3 billion in debt.
The deal hit a snag in February when some shareholders asked the court to block the shareholder vote on the transaction.
Laster delayed the vote by 20 days so other parties could bid. When none did, voting was held and shareholders approved the deal. It closed in March.
Del Monte has been owned by KKR before. In 1989, the private equity firm acquired Del Monte as part of the $25.1 billion buyout of RJR Nabisco and soon resold it.
Shares of KKR rose 6 cents to $10.45 in afternoon trading.
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