SAN FRANCISCO — After attempts to revive its ailing Consumer Products business, Del Monte Foods Corp. has announced plans to sell it to Singapore-based Del Monte Pacific Ltd. for $1.675 billion. The divesture signals Del Monte’s exit from canned foods, as the company shifts its focus to pet products. Upon closing, the company said it will change its name to reflect its new focus.
“Over the last two years, we have made significant investments – operationally, strategically and organizationally – to build the Consumer Products and Pet Products segments into businesses capable of capturing the significant opportunity available to each,” said Dave West, chief executive officer of Del Monte Foods. “We believe D.M.P.L. is the right company to build on the Consumer Products segment’s recent success and achieve its next phase of growth, and we look forward to focusing on expanding our Pet Products business, which operates in one of the most attractive categories across the U.S. consumer packaged goods industry.”
The company discussed during a Sept. 11 conference call with analysts plans for rebooting the brand to drive sales, including advertising strategies, product innovation and new packaging.
“We are pulling on all of the levers,” Mr. West said during the call.
But a strategic review of the business determined its sale would allow stronger growth opportunities for Del Monte Foods in the $20 billion pet category.
Operating income in the Consumer Products division during the first quarter ended July 28 was down 26% from $13.8 million in the same period a year ago. Net sales fell 5.5% to $342.9 million from $362.8 million.
Del Monte Foods’ portfolio of consumer packaged goods brands, which generate approximately $1.8 billion of annual sales, includes No. 1. branded market share positions in major fruit and vegetable categories and No. 2 positions in tomato and broth categories.
The transaction is expected to close by early 2014.
Del Monte Pacific Ltd. owns the Del Monte brand in the Philippines and has been a longtime supplier of processed pineapple to Del Monte Foods. The company said the acquisition will provide opportunities to offer some of its own products to Asian and Hispanic consumers in the United States.Pinnacle Foods, Inc. and Fresh Del Monte Produce, Inc. were among companies that had considered offers for Del Monte Foods’ canned foods business, according to sources.