Kohlberg Kravis Roberts has joined forces with two other private equity firms to agree what would be the largest buyout so far this year. The three firms will pay $5.3 billion to delist Del Monte Foods, a manufacturer of food and pet products that was originally part of RJR Nabisco.
The enterprise value of approximately $5.3 billion includes the assumption of around $1.3 billion in net debt.
Meow Mix: part of this year's largest deal
The $19 per share offer price for Del Monte represents a premium of approximately 40 percent over the company’s average closing share price during the past three months before market rumours of a transaction began, the parties said in a joint statement.
Financing for the deal will be provided by Bank of America Merrill Lynch, Barclays Capital, JPMorgan Chase, Morgan Stanley and KKR Capital Markets.
KKR is joined in the transaction by New York-headquartered Vestar Capital Partners, which was founded in 1988 when seven principles of The First Boston Corporation’s management buyout group spun out. Also participating is four-year-old Centerview Partners, whose private equity business is led by Jim Kilts, a corporate veteran who has held senior positions at Gillette, Kraft Foods and Nabisco.
Del Monte’s brand stable includes the Contadina and College Inn food lines and Meow Mix, Snausages and Nature’s Recipe for pets. Del Monte was originally part of RJR Nabisco, the food and tobacco giant which was taken private 21 years ago in a now legendary bidding war. KKR emerged as victors in the 1988 process and subsequently divested the Del Monte business.
The Del Monte board will spend the next six weeks soliciting bids from other parties. If there is no higher bid for the company, the deal is expected to close by the end of March 2011.
KKR began this year with the £955 million (€1.1 billion; $1.5 billion) acquisition of Pets at Home, a UK-based retail chain selling pet accessories.
At $5.3 billion, the Del Monte deal would be the largest buyout agreed globally this year, according to data provider Dealogic. The Blackstone Group’s proposed $4.8 billion acquisition of Dynergy, whose shareholders recently rejected the offer, would have been second, followed by the $4.7 billion completed acquisition of Tomkins in the UK by the Canada Pension Plan Investment Board and Onex Corp.