Del Monte is exploring a sale of the canned-food business that made it a household name as the company increasingly focuses on products for dogs and cats.

June 14, 2013 Leave a comment

Updated June 13, 2013, 5:39 p.m. ET

Del Monte Canned-Food Business Is Up for Sale

By DANA MATTIOLI and MIKE SPECTOR

Del Monte Corp. is exploring a sale of the canned-food business that made it a household name, said people familiar with the matter, as the company increasingly focuses on products for dogs and cats.

The San Francisco-based canned-food and pet-food company is gauging interest from potential buyers of the division, the people said, adding that the process is in the early stages. The canned-food business generates about $1.8 billion in sales annually, or about half of the company’s revenue.A spokeswoman for Del Monte declined to comment.

A group of private-equity investors led by KKR KKR -0.52% & Co. purchased Del Monte in 2011 for about $4 billion.

Given Del Monte’s valuation in the takeover, any deal for the canned-food business could be priced in the neighborhood of $2 billion.

Centerview Partners and Morgan Stanley MS +3.13% have been hired to market the canned-food business, according to people familiar with the matter.

Del Monte’s canned-food business includes items such as fruit cups, canned vegetables and brands such as Contadina and College Inn broths. The company plans to retain its pet-product business, which includes brands such as Milk-Bone and Kibbles ‘n Bits, say the people. Del Monte signed a merger agreement with Natural Balance Pet Foods Inc. in May, the companies said.

The company’s sales for fiscal 2012 were $3.7 billion, according to its website.

The canned-food category has been under pressure from private-label competitors, said one of the people. During its most recent quarter, sales in the pet-product category grew by 10.1%, compared with a 1.8% increase in the consumer category.

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