Deutsche Bank Downgrades Del Monte Foods To Hold

Deutsche Bank has published a research report on Del Monte Foods (NYSE: DLM) after the company announced its buyout by KKR & Co. (NYSE: KKR) Vestar, and Centerview for $19/share and has downgraded the company from Buy to Hold.

In the report, Deutsche Bank writes "We aren't too surprised at the deal multiples for Del Monte given the mix of the attractive pet food operations combined with more commodity-oriented canned FV&T. Using $19 a share plus $1.3 bil of debt, we calc. deal multiples on C2011: P/E 12.8x, EBIT 9.5x, EBITDA 8.1x, Sales 1.3x. Since our upgrade of Del Monte in Jan 2010, the stock has been volatile. Despite our thesis the pet food was being under-valued, investors were largely unwilling to give credit to changes at Del Monte. In our opinion it is interesting that it took the private markets to recognize such value."

Deutsche Bank has raised the price target from $17 to $19 on Del Monte Foods, which clsoed Wednesday at $17.99.