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Del Monte Seeks Competing Bids as KKR Acquisition Is Delayed

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Feb. 19 (Bloomberg) -- Del Monte Foods Co., the maker of pet foods Meow Mix and Milk Bone, will solicit takeover offers after a judge postponed a $5.3 billion deal with KKR & Co. and suggested adviser Barclays Plc engaged in misconduct.

Perella Weinberg Partners LP was hired to canvass potential bidders, San Francisco-based Del Monte said yesterday in a regulatory filing. “This is an expected development based on the court’s preliminary ruling,” Brandon Ashcraft, a spokesman for London-based Barclays, said in an e-mail.

Delaware Chancery Judge J. Travis Laster said in an opinion that Barclays, hired to handle the original auction, had a conflict of interest because it also helped finance the KKR-led group’s offer. Del Monte was sued in December by a shareholder seeking more than the $19 a share offered. A buyout would give New York-based KKR access to Del Monte’s pet-food business, which has more than doubled sales in the past four years.

“We would obviously be receptive to a superior proposal should one emerge,” Brandy Bergman, a Del Monte spokeswoman, said in an e-mailed statement.

Del Monte fell 3 cents to $18.94 yesterday in New York Stock Exchange composite trading. It has surged 53 percent in the past year.

“Barclays Capital strongly disagrees with characterizations that are based on an incomplete factual record,” Ashcraft said. “Throughout the sales process, we approached 53 potential buyers in an extensive, robust, and public sale that yielded no higher price.”

Vote Postponed

Laster’s ruling, made public on Feb. 15, postponed a shareholder vote of the KKR deal until March 7. The judge also rejected a plan to block Del Monte from seeking other bids. The ruling followed a Feb. 11 hearing in Wilmington, Delaware.

“By failing to provide the serious oversight that would have checked Barclays’ misconduct, the directors breached their fiduciary duties,” Laster wrote in a 55-page opinion. Shareholders “have established a reasonable probability of success” on their claims, based on preliminary pretrial information, he said.

The case is In re Del Monte Foods Co. Shareholder Litigation, CA6027, Delaware Chancery Court (Wilmington).

To contact the reporters on this story: Matthew Boyle in New York at mboyle20@bloomberg.net; Zachary R. Mider in New York at zmider1@bloomberg.net.

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net.

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