The Department of Justice has opened an investgation into the $4 billion takeover of Del Monte Corp by private equity investors led by KKR, according to court papers regarding an investor settlement over the transaction, writes Reuters. The department’s antitrust division has been investigating the facts and circumstances surrounding the sale of Del Monte, reports Reuters.
(Reuters) – The Department of Justice has opened a probe into the $4 billion takeover of Del Monte Corp by private equity investors led by KKR and Co (KKR.N), according to court papers regarding an investor settlement over the transaction.
The department’s antitrust division “has been investigating the facts and circumstances surrounding the sale of Del Monte,” Stuart Grant, a lawyer for Del Monte shareholders, wrote in a November 23 court filing. He said he has provided documents to the division and is cooperating with the investigation.
Calls to the Department of Justice, KKR and Del Monte were not immediately returned. Del Monte and KKR have said that the U.S. Securities and Exchange Commission had issued subpoenas for documents relating to the buyout.
Grant in an interview said the Justice Department did not identify a specific target of its investigation. In court papers, he mentioned the probe as part of a discussion of antitrust claims against KKR.
Grant is seeking approval of an $89.4 million class-action settlement among shareholders, Del Monte and its financial adviser Barclays Capital, a unit of Barclays Plc (BARC.L).
Shareholders accused Barclays of having a conflict of interest because it also provided financing to the KKR group.
The settlement has drawn opposition from a Cleveland pipefitter pension fund, which argued that shareholders are being asked to give up antitrust claims that might be worth hundreds of millions of dollars.
This fund has filed a federal lawsuit in California alleging that KKR and other private equity firms rigged bids to cap the price paid for Del Monte. It has until December 8 to file an amended complaint after an earlier complaint was dismissed.
“It wouldn’t surprise me if they were looking for more information on what might be collusive bid-rigging,” said Craig Wildfang, a lawyer involved in the California lawsuit, referring to the Justice Department probe.
KKR has been involved in antitrust investigations before, having in 2006 and 2009 provided documents to the Justice Department as part of a government investigation into private equity firms, according to securities filings.
KKR and several other private equity firms are also defendants in a 2007 Massachusetts federal lawsuit. They are accused of colluding to lower the purchase prices of leveraged buyout targets such as software company SunGard Data Systems Inc and food service provider Aramark Corp.
Many lawyers in the California case are also involved in the Massachusetts case.
A hearing to approve the Del Monte settlement is scheduled for Thursday in front of Judge Travis Laster in Wilmington.
The case is In Re Del Monte Foods Co Shareholders Litigation, Delaware Chancery Court, No. 6027.
(Reporting by Tom Hals in Wilmington, Delaware, editing by Matthew Lewis)