Del Monte to focus on pet food

Del Monte to focus on pet food

Del Monte Foods sells consumer segment for $1.7b to focus on capturing growth in expanding $20b pet food market.

DEL Monte Foods announced Oct. 10 that it has reached an agreement to sell its Consumer Products business to Del Monte Pacific Ltd. (DMPL) for $1.675 billion in order to focus on capturing growth in its Pet Products business.

Given the distinct operations and markets of Del Monte Foods' two segments, Pet Products and Consumer Products, a sale of the Consumer Products segment to DMPL will ensure that both business units are best positioned for growth in their respective markets, the company said, noting that it will change its name upon closing the transaction to reflect its focus on the pet products market.

On the consumer side, DMPL already owns the Del Monte brand in the Philippines and is the exclusive licensee on the Indian subcontinent for processed products, plus it is the owner of the S&W brand outside of the Americas for both processed products and fresh produce. DMPL is publicly traded in Singapore and the Philippines.

"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," Del Monte Foods chief executive officer Dave West said. "We believe DMPL 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."

Del Monte Foods noted that it wants to focus its resources and efforts on capturing continued growth opportunities in its Pet Products business — which participates in an expanding, $20 billion pet category — through greater emphasis on pet snacks and the pet specialty channel.

DMPL is acquiring Del Monte Foods' strong portfolio of leading consumer packaged goods brands, which generate approximately $1.8 billion of annual sales and have leading positions in numerous packaged goods categories, including major fruit and vegetable categories and the tomato and broth categories.

Del Monte Foods' Pet Products brands already have strong market share positions across pet food and pet snack categories, the announcement said.

With the sale, Del Monte Foods said it can strengthen its pet food and pet snacks brand portfolio, building on the recent acquisition of the Natural Balance pet specialty brand.

The transaction is expected to close by early 2014.

Del Monte Foods is one of the country's largest producers, distributors and marketers of premium-quality, branded pet products and food products for the U.S. retail market, generating more than $3.8 billion in net sales in fiscal 2013.

Its pet food and pet snacks brands include Meow Mix, Kibbles 'n Bits, Milk-Bone, 9Lives, Natural Balance, Pup-Peroni, Gravy Train, Nature's Recipe, Canine Carry Outs, Milo's Kitchen and other brand names.

Del Monte Foods was acquired in 2011 by an investor group led by Kohlberg Kravis Roberts & Co. LP (Feedstuffs, Dec. 6, 2010, and Jan. 24, 2011).

Volume:85 Issue:43

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