In 2010, Del Monte — publicly traded and a large US food producer — agreed to be bought out by private equity funds led by KKR. Del Monte was advised by Barclays Capital, which had risen as an M&A adviser after purchasing Lehman's investment banking business. As is common, the buyout triggered a shareholder lawsuit; as is not so common, a Delaware judge rendered an opinion critical of Del Monte’s board, and even more critical of Barclays. This case presents the perspective of bankers and lawyers at Barclays who worked on the Del Monte deal and watched – from the sidelines – as the lawsuit led to an outcome none of them anticipated.
(A different perspective on this dispute – based exclusively on public sources of information – is separately available in a series of cases entitled In a Pickle: Barclays Capital and the Sale of Del Monte Foods. A separate case, El Paso’s Sale to Kinder Morgan, explores closely related issues arising in the context of the 2011 buyout of Kinder Morgan, which was advised by Goldman Sachs.)
To explore the consequences of legal review of public company buyouts, the legal duties of investment banks to their clients, and the potential conflicts of interest faced by boards, managers, and investment banks in such transactions, and to understand how shareholder litigation can affect the reputations of non-party professionals as much or even more than those of the board members being sued.
Mergers & Acquisitions, Shareholder Lawsuits, Conflicts of Interest, Corporate and Securities Law, Ethics
Geographic: United States
Industry: Consumer Packaged Goods
Event Year Begin: 2010