U.S. agrifood giant ConAgra Foods has signed a deal to take over the packaged fruit, fruit snack and vegetable businesses of Del Monte Canada.
The deal, for an undisclosed sum, also includes Toronto-based Del Monte’s Aylmer line of canned tomato products. The Canadian company’s other product lines, including fresh produce, juices and Aylmer soups, will remain owned by an affiliate of Toronto investment firm Sun Capital Partners.
Buying the Del Monte business "will grow our position in North American tomato products, expand our vegetable product line and add packaged fruit and fruit snacks to our portfolio," ConAgra CEO Gary Rodkin said in a release Tuesday.
The deal also gives ConAgra Del Monte’s headquarters in Toronto and a Del Monte manufacturing plant at Dresden, Ont., about 60 km south of Sarnia.
An affiliate of EG Capital Group, a New York private equity firm, will also sell its minority stake in Del Monte Canada as part of the transaction, Sun Capital noted in a separate release Tuesday.
Sun Capital in 2006 had bought what it described as "a collection of underperforming, non-core food businesses" operated by Kraft and formerly known as CanGro Foods.
Following that takeover, Sun Capital said, management "focused consistently on driving product innovation," including launches of rollups and frozen fruit snacks, moving away from metal cans to plastic packaging, and focusing on higher–margin products. The company also sub-licensed the Del Monte brand to Nestle Canada for use in frozen fruit novelties.
The Del Monte operations, which now employ about 190 people and made about $150 million in fiscal 2011, went from a cash-losing business to a "highly profitable company today" in about five years, Sun Capital said.
The business was renamed Del Monte Canada in 2010 "to better reflect the repositioned company," Sun Capital said.
"Del Monte Canada is a classic example of a successful carve-out of a non-core business, and the execution of a focused plan to develop the business to realize its potential," Sun Capital’s co-CEO Marc Leder said.
"We took an unprofitable business and reinvented it by tapping into the underlying brand value and keeping a focus on innovation and the consumer’s needs."
The storied Aylmer tomato brand dates back almost to the launch of Canadian Canners Limited (CCL) in southwestern Ontario in 1903. By 1916, Del Monte said, CCL’s Aylmer canned tomato brand had become a "household name" in the region, where the company’s tomatoes are still grown and canned.
ConAgra Foods — owner of such brands as Chef Boyardee, Orville Redenbacher’s, Pam, Reddi-wip and Slim Jim, among others — "is an ideal owner for this business given their expertise in the tomato category and their presence in Canada," Leder said Tuesday.
The deal remains subject to the satisfaction of closing conditions and any "applicable regulatory reviews."