Packaged foods giant H J Heinz has agreed to offload a series of brands in a $1.85 billion (€1.94bn; £1.25bn) deal with Del Monte Foods.

A range of slow-growing brands – including StarKist tuna, 9-Lives cat food, College Inn soups and Goodness baby food – will be spun off into a new subsidiary which will be incorporated into Del Monte, more than doubling the latter’s size.

Heinz will gain 0.45 shares in the enlarged Del Monte for every share of its own, giving it a 75% stake overall. The complex structure of the deal allows Heinz to avoid paying tax. In addition, Del Monte will take on around $1.1bn in debt.

The pared-down Heinz will retain the brands posting the highest growth. Its core sauces, ketchup and food divisions reported annual expansion of 5% in recent years, compared with 2.6% for the company as a whole.

These remaining units will benefit from increased adspend now that Heinz has reduced debt. For the 2003 fiscal year, it is planning an “incremental” $100 million of spend.

Some analysts believe a slimmer Heinz will be a more attractive takeover target. However, the group insists the rationale for the Del Monte deal is purely to improve focus.

Data sourced from: The Wall Street Journal Online; additional content by WARC staff