Subject:  Heinz Completes Deal With Del Monte |
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Date Posted: 12:40:51 12/20/02 Fri
Heinz Completes Deal With Del Monte
THE ASSOCIATED PRESS
PITTSBURGH -- H.J. Heinz Co. announced Friday it had completed a $1.2 billion deal that sends StarKist tuna, 9-Lives cat food and other brands to Del Monte Foods Co. and allows the ketchup-maker to concentrate on its core products.
The deal, which was first announced in June, gives Heinz shareholders a 75 percent stake in Del Monte, which will see its presence on supermarket shelves increased with the acquisition of the new brands. Del Monte will also assume $1.1 billion in Heinz debt.
In the deal, Del Monte picks up Heinz's American tuna, private label soup and infant feeding businesses. It also gets Heinz's U.S. and Canadian pet food and pet snacks. Among the products to be transferred are StarKist tuna, 9-Lives cat food, Kibbles 'n Bits dog food and Heinz Nature's Goodness baby food.
The spin-off of the businesses is intended "to make Heinz a more focused company capable of consistent growth, higher margins and returns," said William R. Johnson, chairman, president and CEO of the Pittsburgh-based condiment company.
The brands being spun off represented about 20 percent of Heinz's annual revenue, or $1.8 billion.
Under the terms of the deal, Heinz shareholders receive approximately 0.45 shares of new Del Monte stock for every one share of Heinz stock they own.
With some 351 million shares of Heinz stock outstanding and Del Monte trading at about $7.60 a share on Thursday, the deal was worth about $1.2 billion. De Monte is also assuming about $1.1 billion in debt in the deal.
Del Monte has said it expects to save $143 million over the next four years by sharing eight factories and eight U.S. distribution centers with Heinz. About 5,000 Heinz employees will be transferred to Del Monte, but the companies have said they do not expect any widespread layoffs.
In late trading Friday on the New York Stock Exchange, Heinz shares were up 6 cents at $34.66 while Del Monte shares were down 45 cents at $7.51.
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