Illinois Pension Fund Settlement Displays Shareholder Might

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Written by Mark M. Johnson
Tuesday, 20 December 2011

A new $89.4M settlement agreement won by a pension fund on behalf of Del Monte offers some new weight to the voices of stockholders when merger and acquisition deals spring up

A new $89.4 million settlement agreement won by an Decatur, Ill.-based pension fund on behalf of Del Monte Corp.'s shareholders offers some new weight to the voices of stockholders when merger and acquisition deals spring up.

In a new agreement, Barclays Capital and the San Francisco-based food producer and distributor of the famed Meow Mix cat food manufacturer will deliver a $65.7 million payment through the cash settlement to the NECA-IBEW Pension Trust Fund and its shareholders.

Also, the investment banking division of Barclays Bank will fork over about $23.7 million as a result of the deal which both entered into not due an admission of wrongdoing, but solely to eliminate the uncertainties, burden and expense of further litigation, the settlement filing listed.

Presently, the pension fund, which was first administered in 1971, has more than 2,000-members associated with the National Electrical Contractors Association (NECA) and the International Brotherhood of Electrical Workers (IBEW).

Within the Oct. 6 agreement filed in Delaware Chancery Court, it was noted the grievance first popped up in November 2010 when the Del Monte Foods Company, its prior moniker, announced a planned merger that would allow sponsors or private equity firms to acquire the company for $19.00 per share. Following, from November to December of last year, the NECA-IBEW fund filed seven punitive class actions that challenged the merger as a product of alleged breaches of fiduciary duties.

After gaining lead plaintiff status for the collective shareholder suit at the close of 2010, the group collectively won an injunction ruling in February by Chancery Court Vice Chancellor J. Travis Laster that lasted for a 20-day period. Ultimately, on March 7, 75.15% of shareholders approved its merger with Blue Acquisition Group that kept the Del Monte Corporation as the surviving entity and subsidiary.

On its Web site, Del Monte disclosed that the investor group led by Kohlberg Kravis Roberts & Co., Vestar Capital Partners and Centerview Capital purchased the entity for about $5.3 billion.

Despite the Del Monte team receiving $2.75 million interim award in relation to attorneys fees and expenses in July, the food giant lost out on a motion for plaintiffs to pay additional fees in relation to the injunctive relief that delayed the shareholder vote on the merger and temporarily enjoining enforcement of certain deal protections.

Also, it was disclosed in the Oct. 6 filing that parties engaged in extensive, arm's length negotiations, including participation in several mediation sessions, with a deal being reached Sept. 9. Talks on the agreement matter first began May 31.

Ruling response

Robert Williams, NECA-IBEW Pension Trust Fund administrator, explained in his comments today that it is important and valuable for Taft-Hartley pension funds to step up and protect shareholder rights and interests in cases like this.

Grant & Eisenhofer and Robbins Geller Rudman & Dowd represented the NECA-IBEW Pension Trust Fund in the matter, the Friday announcement stated.

In its response, Barclays Capital, which was added to the legal effort for its aiding and abetting the director defendants breaches of fiduciary duty and for tortuous interference on Feb. 18, said today the parties have agreed to settle the litigation to avoid the expense, distraction and uncertainty of litigation.

We believe that the sale process leading up to the merger achieved the best price reasonably available for Del Monte stockholders, Brandon Ashcraft, a Barclays Capital spokesperson, disclosed in a firm statement.

Last Updated ( Tuesday, 20 December 2011 )

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