Del Monte Expands Pet Food Business

NEW YORK - Mar 16/06 - SNS -- Del Monte Corporation has entered into an agreement to acquire certain pet product assets, including the Milk-Bone brand, from Kraft Foods Global, Inc. for approximately $580 million.

The effective cost to Del Monte of the acquisition will be offset by approximately $125 million of future tax benefits which Del Monte expects to achieve as a result of the acquisition.

Project Brand is Del Monte's previously announced strategic plan to enhance shareholder value by increasing the branded focus of its product portfolio and accelerating innovation-driven organic growth in higher margin categories.

Milk-Bone is a leader in dog snacks, generating revenues of approximately $180 million in calendar year 2005 (53 weeks). The acquisition complements Del Monte's portfolio of pet products in dog snacks, a segment which has grown at an average annual rate of approximately 10% since fiscal 2001. As a result of the transaction, Del Monte's pet business will have an improved platform for developing and promoting innovative and successful products.

Del Monte expects to fund the Milk-Bone acquisition with additional debt, and in order to complete this transaction, Del Monte has received financing commitments for senior debt financing in an amount sufficient to fund the purchase price. Assuming that most of Del Monte's post-acquisition cash flow will be used to pay down debt, the Company expects debt levels to return to the Company's current and targeted range within the next three years.

Del Monte Foods expects the transaction to close in fiscal 2007, subject to the satisfaction of customary closing conditions and antitrust approval under the Hart-Scott-Rodino Act. The financial results of Milk-Bone are expected to be reported within the Pet Products reportable segment. Goldman, Sachs & Co. and Banc of America Securities LLC are acting as financial advisers to Del Monte Corporation.