Del Monte Foods announced Friday (Oct. 11) it is selling its canned food division that includes brands like Del Monte Pineapple and Contadina to Singapore-based Del Monte Pacific Ltd.for $1.675 billion.
The San Fransico-based company has tried for two years to revamp its canned food business but ultimately chose to cut it loose and focus on pet products.
The company will change its name after the deal closes early next year to better fit its focus on pet products with brands such as Pup-Peroni, Meow Mix and Milk-Bones.
Del Monte Pacific, which is publicly traded in Singapore and the Philippines, said the deal would add about $1.8 billion to its annual sales and $178 million to operating earnings. The company already owns one of the world's largest pineapple plantations and said it would benefit from owning brands that have significant market share in canned fruit, vegetables and broth in the U.S.
Dave West, CEO of Del Monte Foods, said Del Monte Pacific is the right company to expand the consumer products business it was acquiring. This division posted net sales of $342.9 million in the first quarter ended July 28. Revenue slid 5.5% from the prior year. Operating income in this canned food division was $13.8 million in the quarter, down 26% from the same period last year.
The privately held company said it expects the pet products market to grow as consumers increasingly consider pets as part of their family and increase their spending on premium pet food. It recently acquired specialty brand Natural Balance for $341.4 million in July.
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.
Del Monte Foods is a supplier to Wal-Mart Stores Inc. and operates a sales office in Bentonville.