A Delaware, USA, judge recently accepted an October settlement involving Del Monte Foods' shareholders over a lawsuit that arose from the sale of the company's petfood business division in 2010 to Barclays Capital. The deal finalizes the US$89.4 million settlement arranged by the Delaware court that claims the two parties did not act properly in the sale of the petfood business to private-equity investors, led by KKR.
The shareholders sued Del Monte and Barclays, citing a potential conflict when the bank financed the debt needed for private-equity investors to buy the California, USA-based petfood maker for US$5.3 billion, while simultaneously acting as an advisor to the board on its sale negotiations. The shareholders claimed Del Monte's sale was organized to lessen bidding competition.
Earlier in the year, Delaware Chancery Court, Judge Travis Laster ruled in favor of plaintiffs citing Barclays' lack of disclosure, and most recently ruled that the US$89.4 million settlement "provides excellent consideration" to Del Monte shareholders, who will receive an additional 50 US cents to the company's buyout of US$19 per share. According to October filings with the Securities and Exchanges Commission, Barclays Capital and Del Monte Foods will split a US$89.4 million payment, sending US$23.7 million and US$65.7 million, respectively, to Del Monte's shareholders. Both Del Monte and Barclays denied any wrongdoing in the case.