Del Monte, Barclays to pay shareholders $89.4 million
Oct. 7, 2011
WILMINGTON, DEL. — Del Monte Corp. and Barclays Capital, Inc. have agreed to pay $89.4 million to Del Monte shareholders who were cashed out in the 2010 buyout of Del Monte by a group of private equity firms led by Kohlberg Kravis & Roberts.
The payment is one of the largest cash settlements ever in Delaware Chancery Court history. Del Monte will contribute $65.7 million with Barclays paying $23.7 million. The lawsuit challenges the common practice of many deal advisers to simultaneously offer sell-side financing in a transaction, and the court ruling is leading to changes in the way investment banks conduct business in the merger and acquisition marketplace.
“This case has sharply reined in certain practices within the investment banking community where many financial advisers regularly gamed the merger and acquisition process through double-dip engagements that buyers and sellers not only tolerated but often encourages, particularly in public-to-private deals,” said Randall Baron, partner with Robbins Geller Rudman & Dowd, one of the law firms that represented the shareholders. “We believe the settlement delivers to Del Monte’s common shareholders the added premium they rightly deserved through the buyout, and we are gratified that our litigation sparked a pullback among major banks of advising parties on both sides of a transaction.”
In January, Del Monte Foods was sold to the group of private equity investors for $19 per share.