A Delaware judge has postponed a shareholder vote on the $5.3 bn buyout of Del Monte following accusations that Barclays Capital, a lead advisor to Del Monte, was manipulating the sales process to drive up its fees.
Judge J Travis Lester ruled that Barclays and KKR (which is leading the buyout deal) had purposefully withheld information from the board to prevent it seeking an alternative financial advisor. Lester threw down the gavel and delayed a shareholder vote on the buyout by 20 days and nixed the $120 mn termination fee that would have been collected by the KKR-led consortium in the event of a competing bid.
KKR, along with outside investors Vestar and Centerview Partners, had agreed to take Del Monte private for $19 a share, valuing it at $4 bn.
In his ruling, Lester concluded: ‘Although Barclays’ activities and non-disclosures in early 2010 are troubling, what indisputably crossed the line was the surreptitious and unauthorised pairing of Vestar with KKR… In doing so, Barclays materially reduced the prospect of price competition for Del Monte.’