Two firms join KKR in Del Monte deal talks: sources

NEW YORK/PHILADELPHIA (BestGrowthStock) – Two private equity funds are joining Kohlberg Kravis Roberts & Co (KKR.N: ) in the buyout firm’s bid for Del Monte Foods Co (DLM.N: ), two sources familiar with the situation said on Wednesday.

Vestar Capital Partners and a fund run by Centerview partner James Kilts are both working with KKR, said the sources, who declined to be identified by name because the talks were not public. The news was earlier reported by Bloomberg.

An agreement could be announced in the coming days, one source said.

KKR has been in advanced talks to buy Del Monte, two sources familiar with the situation told Reuters a week ago.

KKR had offered $18.50 a share for Del Monte, which makes canned vegetables and pet food, one source said at the time. An offer of $18.50 a share would value the company at about $3.58 billion.

Centerview recently bought pizza maker Richelieu Foods Inc from Brynwood Partners. Vestar has invested in consumer-focused companies including Birds Eye Foods and Sun Products.

KKR, Centerview, Vestar and Del Monte declined to comment.

Del Monte, the maker of Meow Mix cat food and Milk-Bone dog biscuits, has cut its sales outlook twice this year, citing higher rebates paid to retailers to spur consumer spending.

The company currently trades at 12-times projected earnings, which is below the sector average of roughly 16.4 times projected earnings, according to Reuters data.

Del Monte’s stock has surged 62 percent this year, with sharp gains over the past week due to takeover reports. The stock closed Wednesday at $17.99, up 94 cents, or 5.5 percent, on the New York Stock Exchange.

A deal would be the latest in a flurry of private equity activity. Earlier this week, U.S. apparel retailer J Crew Group Inc (JCG.N: ) agreed to be acquired by TPG Group and Leonard Green & Partners LP.

Meanwhile, Carlyle Group (CYL.UL: ) recently struck a number of deals, including a $2.6 billion deal to buy Syniverse Technologies Inc (SVR.N: ).

(Reporting by Megan Davies in New York and Jessica Hall in Philadelphia; Editing by Gary Hill)

Two firms join KKR in Del Monte deal talks: sources