British-based trading and manufacturing group Polly Peck International PLC said today it plans to acquire the fresh fruit business of RJR Nabisco Inc.'s Del Monte Co. for $875 million in cash.
The sale of the unit by RJR Nabisco is part of a planned divestiture of $6 billion of food division assets to pay for its $25-billion leveraged buyout headed by Kohlberg Kravis Roberts & Co. earlier this year.
The deal required a number of asset sales to pay down the massive debt in the leveraged buyout that ranked as the largest corporate acquisition on record.
Polly Peck said in a statement that the acquisition would give it exclusive rights to use Del Monte's brand name on fresh fruit and vegetables worldwide. RJR Nabisco will retain the trademarks for use on processed foods and in other businesses.
Polly Peck Chairman Asil Nadir said: "The acquisition represents a remarkable opportunity for PPI to establish itself as one of the world's largest suppliers of fresh fruit and vegetables."
2 Objectives Achieved
He said the acquisition achieved two of his group's principal strategic objectives.
"It establishes a significant presence in the North American market, and PPI becomes a world-class player in the fresh fruit industry," he said.
The two businesses are complementary, Polly Peck said. Del Monte is strong in bananas and pineapples and in the American and Asian markets, while Polly Peck is stronger in citrus fruits and many European markets.
Polly Peck's expertise in shipping, packing and handling should enable it to make significant savings in Del Monte's fresh fruit costs, it said.
Del Monte Fresh Fruit had an operating profit of $79 million on sales of $600 million in 1988.