Judge approves settlement of Del Monte lawsuits

[December 02, 2011]  WILMINGTON, Del. (AP) -- A judge gave approval Thursday for an $89.4 million settlement between Del Monte Corp. shareholders on one side and the food maker and Barclays Capital Inc. on the other over Del Monte's $4 billion buyout.

Investors led by Kohlberg Kravis Roberts & Co. bought the maker of Contadina tomato products and Kibbles `n Bits, Meow Mix and Milk-Bone pet foods earlier this year.

Shareholders claimed that Del Monte directors breached their duties and misled investors. They also accused Barclays of manipulating the sale to boost its own fees and of having a conflict of interest because, in addition to advising Del Monte, the London-based bank provided some of the buyers' financing.

San Francisco-based Del Monte agreed to pay $65.7 million in cash in return for being released from these and further shareholder claims. Barclays agreed to contribute $23.7 million in cash.

Attorneys for the shareholders will receive $22.3 million of the settlement, for which the parties requested court approval in October.

Vice Chancellor J. Travis Laster signed off on the settlement at a hearing Thursday, rejecting arguments by an Ohio pipefitters union pension fund that it should be allowed to opt out of the settlement to pursue an antitrust lawsuit against the investors in California.

Laster said the union's antitrust claims were based on the same facts as those in the Delaware case. And he noted that the settlement won't affect the ongoing investigation by the Justice Department's antitrust division.

"This is a settlement that provides excellent consideration for the class," Laster said.

The investors, who were led by Vestar Capital Partners and Centerview Partners in addition to KKR, agreed last year to buy the food maker for $19 per share and assume $1.3 billion in debt.

The deal hit a snag in February, when Laster delayed a shareholder vote on its approval, ruling that Barclays had misled Del Monte's board, colluded with the private equity firms and "secretly and selfishly manipulated the sale process" in order to obtain "lucrative buy-side financing fees."

But no other potential buyers came forward, and the deal closed in March.

[Associated Press; RANDALL CHASE]

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