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PITTSBURGH - H.J. Heinz today announced it will spin off brands including StarKist tuna and 9Lives cat food and merge them with a reorganized Del Monte in which Heinz shareholders will own a 75 percent stake.
The companies said that the businesses being spun off generate sales of about $1.8 billion, or 20 percent of Heinz's annual sales, and that the boards of both companies have approved the plan.
Under terms of the deal, Heinz will create a new subsidiary that will be spun off to Heinz shareholders and immediately merged into a unit of Del Monte.
Included in the transaction will be the following brands: StarKist, 9-Lives, Kibbles 'n Bits, Pup-Peroni, Snausages, Nawsomes, Heinz Nature's Goodness baby food and College Inn broths. The transaction is expected to close around the end of the calendar year 2002 or early 2003.
William R. Johnson, Heinz chairman and CEO, said the deal will allow Heinz to focus on its core businesses -- ketchup, sauces and foods -- while Del Monte will get six top brands. "For Heinz, less will be more, for Del Monte, bigger will be better," Johnson said.
San Francisco-based Del Monte said the deal will increase its annual sales to more than $3 billion.
"With this transaction, Del Monte will have center-store scale with a broad product portfolio in multiple attractive dry-food categories," said Del Monte chairman and CEO Richard Wolford, who will retain his posts with the company.
About 5,000 Heinz employees will transfer to Del Monte, but the companies said there is expected to be minimal impact on the size of the Heinz and Del Monte work forces.