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Del Monte changes name to Big Heart Pet Brands as sale completed

| Wednesday, Feb. 19, 2014, 10:54 a.m.
The Del Monte building on the North Shore Friday March 30, 2012. James Knox | Pittsburgh Tribune-Review

Del Monte Foods is opening its heart to pet lovers.

The company changed its name to Big Heart Pet Brands Inc. on Wednesday to identify with its new focus — pet products.

The rebranding culminated the sale of its canned foods business to a Philippines company for $1.68 billion. Big Heart said it will remain headquartered in San Francisco and continue to have offices in Pittsburgh.

The sale of the canned food business to Del Monte Pacific Ltd. of the Philippines was announced in October. The transaction consolidates the 100-year-old Del Monte brand name under two main companies worldwide from three.

“As a standalone pet products company, Big Heart Pet Brands will be singularly focused on capturing growth opportunities in the expanding $21 billion pet products category,” said CEO Dave West. “We are uniquely positioned with a powerful and broad pet portfolio, (and) a strong position in key pet food categories.”

Del Monte Pacific has owned the Del Monte brand in Asia, the Middle East, Europe and Africa since 2007. It will now add Del Monte Foods Inc. to its portfolio of American canned foods brands, such as such as Contadina and College Inn.

Del Monte Pacific and Del Monte Foods are not related to Fresh Del Monte Produce Inc. and other smaller companies that use the name in Canada and Asia. The CEO of the U.S. unit is Nils Lommerin, who had been chief operations officer of the former Del Monte Foods.

The company had about 330 employees in the Del Monte Center on Pittsburgh's North Shore, many in accounting, finance, information technology and other service jobs shared by both businesses.

Big Heart Pet Brands will retain about 220 employees in Pittsburgh, spokeswoman Chrissy Trampedach said in a statement. The majority of the other 110 transferred to Del Monte Foods, she said. “Big Heart Pet Brands is pleased to continue to be part of the Pittsburgh community, and has no plans to make any further changes at this time.”

Lommerin or other spokesmen for Del Monte Foods could not be reached for comment.

Big Heart Pet Brands will concentrate on pet food products and snack brands, including Meow Mix, Kibbles ‘n Bits, Milk-Bone, 9Lives, Natural Balance, Pup-Peroni, Gravy Train and Nature's Recipe. The company produces and distributes private label pet products and food products.

The sale of the consumer foods business strengthens Big Heart Pet Brands' profile, said Brian Weddington, a senior credit officer at Moody's Investors Service, which changed the outlook on its $2.6 billion in debt to stable from developing.

“The pet food business has stronger operating margins and greater overall earnings growth potential compared to the canned food business that was sold,” Weddington said. The company struggled with deteriorating volumes and margins in the consumer foods business as shoppers gravitated more to fresh produce. “However, the stronger product category profile is partially offset by reduced scale, still high leverage and acquisition risk.”

The transaction increases Del Monte Pacific's annual sales from $500 million to more than $2 billion.

“This is a game changer for the company, and fortifies (our) vision of becoming a global branded food and beverage company,” Chairman Rolando Gapud said in a statement.

Del Monte Foods' 26 percent market share in the canned fruit market in the United States will provide Del Monte Pacific with a solid growth platform, Gapud said, and will aid growth in Asian and South America markets.

In the statement, Lommerin said he will focus on cutting costs and increasing sales, especially in the canned pineapple market, where its U.S. market share is less than 10 percent, taking advantage of a large plantation in the Phillipines owned by Del Monte Pacific.

John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or joravecz@tribweb.com.

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