In a Pickle: Barclays Capital and the Sale of Del Monte Foods (A)
Posted: 4 Feb 2012
Date Written: August 19, 2011
In February 2011, Judge Laster of the Delaware Chancery Court was considering a suit claiming that Del Monte board members had breached their fiduciary duty to shareholders by not pursuing the best transaction for Del Monte. In the course of the discovery phase of the trial, the plaintiffs, and Del Monte's board, had learned that the company's financial advisor, Barclays Capital, had also been working with KKR and its partners to create a bid process that could favor them. In addition to the fee from Del Monte for advising on a successful sale, Barclays also desired to play a leading role in the lucrative financing that the private equity firms would organize to fund the deal following a successful bid. The plaintiffs asked the court to delay the shareholder vote on the merger to solicit additional bidders.
Learning Objective: To explore the responsibilities that investment bankers as advisors have to their clients, as well as the challenge boards of directors face in properly executing their fiduciary duties.
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