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Questions remain over plans for American Samoa cannery

PAGO PAGO, American Samoa (Samoa News, June 30, 2008) - San Francisco-based Del Monte Foods Co., announced yesterday that it has entered into an agreement to sell its seafood business, including StarKist Seafood, to South Korean based Dongwon Group for $363 million, which is subject to a working capital adjustment.

StarKist Seafood includes its StarKist Samoa operations in the territory. Del Monte acquired StarKist in 2002 from Heinz Corporation.

The Dongwon Group entities involved in the acquisition are Dongwon Enterprise, Dongwon F&B Co., Ltd.; and Dongwon Industries Co., Ltd. Dongwon issued its own statement announced the same deal.

Del Monte chairman and chief executive officer Rick Wolford said the divestiture of its seafood business, including StarKist, is a significant step in the realignment of the company portfolio toward higher margin, higher growth businesses.

"This divestiture will immediately help improve our margin structure, eliminate a source of earnings volatility and reduce our debt leverage," he said in a statement. "Importantly, this step is also consistent with our recently announced sharpened strategy targeted to accelerate growth by investing in faster growing, value-added, higher margin branded businesses, supported by our recent marketing-centric organizational realignment."

"Given the unique dynamics of our seafood business, including its heavy dependence on a single input cost and participation in a comparatively lower growth category, StarKist was no longer an ideal fit for Del Monte, given our sharpened strategic focus going forward," he continued. "That said, StarKist is clearly an extraordinary business with very strong brand recognition and a loyal consumer base which make it an attractive asset for Dongwon...In sum, we believe that StarKist Seafood will thrive with Dongwon, which is strategically focused on leveraging the seafood business model and StarKist's inherent capabilities."

Dongwon Enterprise vice chairman Ingu Park said in a joint statement with Wolford that acquisition of StarKist seafood will help Dongwon establish a strong foothold and penetration in the U.S. market.

Park believes StarKist seafood will broaden Dongwon's distribution network and capabilities while fortifying Dongwon's presence as a leading provider of marine products in the global market.

"We believe that StarKist is highly complementary to our existing portfolio and to our long history of operating in the seafood business," said Park. "We look forward to leveraging the skills and knowledge of the talented StarKist team and building upon the great business they have created."

Upon closing, all of Del Monte's direct plant employees related to the seafood business and approximately 34 other salaried positions are expected to join Dongwon.

Under the terms of the agreement, Del Monte will enter into a two-year Operating Services Agreement with Dongwon where Del Monte will provide operational services, such as warehousing, distribution, transportation, sales, IT, and administration, for Dongwon, according to a joint statement from the two companies.

In fiscal year 2008, the seafood business generated approximately $560 million of net sales, it says.

It wasn't immediately clear yesterday if StarKist Samoa management had been informed prior to the official announcement.

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