UPDATE 1-Del Monte Pacific buys U.S. canned food business for $1.7 bln


(Corrects first bullet point to Centerview Capital, notPartners, and KKR, not KRR)

* Del Monte Foods backed by KKR, Centerview Capital

* Del Monte Pacific shares surge 10 percent

* Deal will add net sales of more than $1.8 billion

* Funded via $745 mln equity in company's new subsidiary

* Company will also use $930 mln of debt financing

By Anshuman Daga

SINGAPORE, Oct 11 (Reuters) - Singapore-listed Del MontePacific Ltd will buy the canned food business ofprivate equity-backed Del Monte Foods Consumer Products Inc for$1.7 billion, gaining a direct presence in the key U.S. marketand reuniting a substantial portion of the Del Monte brandfamily.

Shares in Del Monte Pacific surged 10 percent on the deal.

It said the acquisition will give it the No. 1 brandedposition in major canned fruit and vegetable categories in theUnited States as well as the opportunity to offer some of itsown products to the large and fast-growing Asian and Hispanicpopulations there.

The deal will also allow San Francisco-based Del Monte Foods to concentrate on its pet foods unit, including the recentacquisition of Natural Balance. Del Monte Foods was acquired in2011 by KKR & Co LP, Vestar Capital Partners andCenterview Capital in a deal valued at $5.3 billion.

With the sale of its canned food business, the company plansto change its name.

Del Monte Pacific, a company that is strong in cannedpineapple and tomato sauce, has been enjoying strong growth withnet profit nearly trebling over the past three years to $32.1million in 2012.

The transaction will give it an additional net sales of morethan $1.8 billion.

"This landmark transaction offers DMPL greater access to awell-established, attractive and profitable branded consumerfood business in the world's biggest market," Del MontePacific's Chairman Rolando Gapud said in a statement.Del Monte Pacific, which counts the Philippines as its largestmarket, is 67 percent-owned by NutriAsia Pacific Ltd (NPL). NPLis owned by the NutriAsia group, which is majority-owned by theCampos family of the Philippines.

With Thursday's share surge, the company's stock is up 76percent so far this year, valuing the firm at S$1.17 billion($936 million).

Del Monte Pacific said the deal will be largely fundedthrough a combination of $745 million of equity in a newsubsidiary created for the acquisition, as well as long-termdebt financing of about $930 million that have been committed bya syndicate of bank lenders. It also plans to issue common andpreferred shares in the market.

Perella Weinberg Partners LLC is the lead financial advisorand Citibank is a financial advisor to the company on thistransaction.

Pinnacle Foods Inc and Fresh Del Monte Produce Inc were among the companies that had considered offers forDel Monte Foods' canned foods business, sources have said.

Del Monte Pacific and its subsidiaries are not affiliatedwith other Del Monte companies in the world, including Fresh DelMonte Produce Inc, Del Monte Canada and Del Monte Asia Pte Ltd. ($1 = 1.2495 Singapore dollars) (Additional reporting by Saeed Azhar; Editing by Edwina Gibbs)

View Comments (1)