PITTSBURGH Heinz-Del Monte deal will be tax-free, IRS says

Del Monte's sales are expected to double under the deal.
PITTSBURGH (AP) -- H.J. Heinz Co. announced Friday that a plan to spin off brands such as StarKist Tuna and 9-Lives cat food to Del Monte Foods will be tax-free to the companies and their shareholders.
The Internal Revenue Service's decision capped a regulatory review that was the final hurdle for the companies to complete the estimated $2.5 billion deal, which includes transferring $1.1 billion in debt to Del Monte.
"All the signs are pointing to a successful conclusion of the deal at the end of December or January," said Heinz spokesman Ted Smyth.
On Thursday, San Francisco-based Del Monte reaffirmed its 4-month-old commitment to Heinz after news that an unidentified suitor offered $575 million to take over Del Monte.
The investment firm Texas Pacific Group, whose holdings include a 46.5 percent stake of Del Monte, has already pledged to vote in favor of the deal with Pittsburgh-based Heinz.
Shareholders to vote
Shareholders were scheduled to vote on the tax-free deal Dec. 19.
If approved, Del Monte will get Heinz's StarKist brand, the company's pet food brands -- including 9-Lives, Kibbles 'n Bits and Snausages -- and its domestic baby food business and College Inn Broths.
Annual sales at Del Monte, the country's largest manufacturer and distributor of canned fruit and vegetables, would be expected to double to more than $3 billion.
Heinz has acknowledged it has had difficulty increasing sales of tuna and pet food. The deal will enable the ketchup-maker to concentrate on its core products, company officials said.
Shares of Heinz were trading down 25 cents at $34.38 and Del Monte's shares were up 20 cents to $9.08 on Friday morning on the New York Stock Exchange.