Investors settle Del Monte lawsuit

Shareholders in the food group have won an $89.4m settlement that challenged the buyout of Del Monte Foods.

Del Monte Corporation and Barclays Capital agreed to pay $89.4 million to Del Monte investors who were cashed out in the 2010 buyout of Del Monte by a group of private equity firms led by KKR.

Del Monte will pay $65.7 million while Barclays will pay $23.7 million, according to a statement from law firm Grant & Eisenhofer, which represented the shareholders.

“Del Monte has entered into the proposed settlement to eliminate the uncertainties, burden, and expense of further litigation,” the company said in an Securities and Exchange Commission filing. The companies denied any wrongdoing.

Investors in Del Monte, including the Illinois-based NECA-IBEW Pension Trust Fund, will get at least 30 cents more a share to resolve claims they weren’t paid enough in the $19-a-share buyout, according to the law firm.

In November 2010, KKR joined forces with two other private equity firms – New York-headquartered Vestar Capital Partners, and Centerview Partners – to pay $5.3 billion to delist Del Monte Foods, a manufacturer of food and pet products that was originally part of RJR Nabisco. RJR Nabisco was famously acquired by a KKR-led consortium in 1988 for a then-record sum after a bitterly-contested bidding war.

Centerview is led by Jim Kilts, a corporate veteran who has held senior positions at Gillette, Kraft Foods and Nabisco.

The settlement also resolves claims that Barclays, which served as Del Monte’s financial advisor while providing some financing for the buyers, had conflicting interests in the deal.

Barclays was paid $24 million to advise Del Monte and $24 million for providing loans to the buyers, according to the lawsuit.

“We are pleased that the parties have agreed to settle the litigation to avoid the expense, distraction and uncertainty of litigation,” a Barclays spokesperson, said in a statement. “We believe that the sale process leading up to the merger achieved the best price reasonably available for Del Monte stockholders.”

A KKR spokesperson declined to comment.