Del Monte and Barclays Capital to Pay $89.4 Million to Settle Shareholder Suits

October 07 00:00 2011

New York, October 7 ( – Del Monte’s buyout by an investor group led by Kohlberg Kravis Roberts & Co was the subject of shareholder lawsuits. To end these lawsuits, the food maker Del Monte and advisor Barclays Capital have agreed to pay $89.4 million to shareholders.

The proposed settlement filed Thursday with the Delaware Chancery Court envisages that Del Monte will pay $65.7 million and Barclays, who served as financial advisors to Del Monte in its buyout, would pay $23.7 million.

Del Monte’s brands include Contadina tomato products and Kibbles ‘n Bits, Meow Mix and Milk-Bone pet foods. The company’s $4-billion buyout was challenged by its shareholders who alleged that at the time of negotiating the deal, board directors at San Francisco-based Del Monte breached their fiduciary duty and misled investors.

It was also alleged by the investors that Barclays had a conflict of interest because it provided some of the financing for the buyout, in addition to advising Del Monte. Vice Chancellor J. Travis Laster in the Delaware court determined in February that the sale process was manipulated by Barclays to boost its fees. Barclays was also found to have colluded with the private equity firms. Del Monte was faulted for its handling of the deal.

Both Del Monte and Barclays have denied the allegations as part of the settlement, which still needs Laster’s approval.