Del Monte LBO seen at advanced stage

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Del Monte Foods (NYSE:DLM) has reinitiated a sale process it had suspended earlier this year, several industry bankers following the situation told dealReporter.

A deal for the San Francisco-based canned vegetable and the pet food maker could be announced in the next several weeks provided that no complications arise in the deal discussions, two of the industry bankers said. KKR & Co (NYSE:KKR) may have emerged from the pack of private equity firms chasing Del Monte, the first industry bankers said.

A spokesperson for Del Monte said as a matter of policy Del Monte does not comment on market rumor or speculation. On the sidelines of the Buyouts Texas conference in Dallas Alex Navab, co-head of North American private equity at KKR told this news service that “we can’t talk about any deals we’re working on”.

The three industry bankers said that other private equity firms had attended a process for Del Monte in the March to May 2010 timeframe. One of these sources said that process had been put on “pause” and then recently restarted. Barclays Capital may be advising the company, the second industry banker added. This information could not be confirmed.

This spring, KKR was the bidder who had gotten the process initiated and had done the most work, the second industry banker said. The first industry banker said that KKR was believed to be the front-runner, if not the sole surviving bidder for the dog food company. This banker said the likelihood of a deal happening was good, but cautioned that Del Monte may be holding out for a better price.

The second industry banker said that there has been talk the deal could price at USD 18.50 per share. Del Monte has scheduled its fiscal second quarter results on 2 December.

The second industry banker and a fourth industry banker said Apollo Management looked at Del Monte in the spring. The second industry banker added that Carlyle may have also been sniffing around the pet product maker earlier in the year.

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