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Barclays Conflict Cited in Revised Del Monte Investor Suit

Feb. 22 (Bloomberg) -- Barclays Plc helped directors of Del Monte Foods Co. arrange the sale of the company to a group led by KKR & Co. for an inadequate price, as the bank worked on both sides of the deal, Del Monte shareholders alleged in newly filed court papers.

London-based Barclays is wrongly acting as deal-adviser to Del Monte and at the same time providing a loan under lucrative terms, investors’ lawyers said in a partly redacted Delaware Chancery Court complaint filed late yesterday.

“Barclays intended to force through a sale” and “intended to secure for itself not only substantial fees for serving as the sell-side financial adviser, but also additional fees for providing financing to any buyer, said plaintiffs’ lawyer Stuart M. Grant in court papers.

San Francisco-based Del Monte was sued in December by a shareholder seeking more than the $5.3 billion, $19-a-share bid.

‘‘Del Monte directors breached their fiduciary duties by failing to exercise adequate oversight,’’ allowing Barclays ‘‘to engage in outright fraud’’ so the sale process ‘‘was irreconcilably corrupted,’’ Grant said in court papers.

The amended, consolidated complaint asks Delaware Chancery Court Judge J. Travis Laster to block the takeover and to award damages and legal fees.

Shareholders were scheduled to vote on the buyout last week. After hearing a presentation by Grant on Feb. 11, Laster postponed the vote until March 7 to allow investors time to digest additional data about the process.

Evaluating Fairness

Del Monte directors’ lawyer Raymond DiCamillo said in a brief for the Feb. 11 hearing that there’s no evidence Barclays’s status as one of nine lenders in the buyout compromised Barclays’s objectivity in evaluating fairness of the deal.

He said the company contacted 53 possible buyers, and the offering price is above the highest Del Monte ever traded. He said Del Monte also hired Perella Weinberg Partners LP for a second opinion.

Barclays’ financing role, in a minority position, was fully disclosed and specifically authorized by the company and its counsel,” and the company expects “to set the record straight in court,” said Kerrie-Ann Cohen, a Barclays spokeswoman, in an e-mailed statement.

The 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.

Del Monte fell 3 cents to $18.94 when last traded on the New York Stock Exchange Feb. 18.

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

To contact the reporter on this story: Phil Milford in Wilmington, Delaware, at pmilford@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

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