Del Monte Foods, the US-based food group, has confirmed it has agreed to sell its seafood business to South Korea's Dongwon Enterprise Co.

The announcement today (30 June) came after reports in South Korea last week that claimed Dongwon had confirmed an agreement had been reached.

Dongwon has moved to buy a business that includes the StarKist brand but which has been struggling with mounting costs.

The price of skipjack tuna is estimated to have jumped 70% in the last year and Del Monte said the sale - for US$363m - would help its margins.

"This divestiture will immediately help improve our margin structure, eliminate a source of earnings volatility and reduce our debt leverage," said Del Monte chairman and CEO Rick Wolford.

"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."

Dongwon vice-chairman Ingu Park said the StarKist deal would help drive the South Korean firm's international expansion.

"We believe that 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," Ingu said.

Dongwon will take on Del Monte's manufacturing assets in American Samoa and Ecuador. For a two-year period, Del Monte will give assistance to Dongwon in areas including warehousing, distribution and IT.