Hormel Foods Corporation: Canning Unwanted Brands

The Challenge

The executive-management team at this 115-year-old food processor decided it had a frozen-food business that no longer fit the company’s long-term strategic goals.

It carefully considered its options, from dissolution to spin-off to hiring an investment bank to manage an orderly sale (with a sizable commission to match), and found each option unsatisfactory for different reasons. Then, the management team contacted ICON.

How ICON Uncovered Value

ICON offered a stunningly simple solution: It purchased both brands outright from Hormel for cashU.S. federal banknotes; one of ICON's financial options. – at full book valueThe value of something as shown on bookkeeping records and as distinguished from market value; the value of an asset equal to cost less depreciation. (something no other buyer would offer). In return, Hormel placed a clearly specified amount of its budgeted media buys through ICON over three years, including network TV, cable, radio and consumer print.

Hormel shed a business unit that no longer fit the company’s direction and gained a new strategic business partner. It would turn to ICON again, when yet another brand proved a distraction from its core business. Within a year, the entire brand and all its component parts – manufacturing, employees, supply chain, customers and brand identity – had been quietly sold to a suitable buyer.

Result

These transactions worked so well that the next time Hormel contacted ICON, it was to discuss a transaction with actual wings. Subsequently, Hormel identified an Astra corporate jet it no longer needed. Hormel did not want to get into the used aircraft business.  ICON offered a significant cash premium above market valueThe price at which both willing buyers and sellers will transact business, the highest value being full market value.. Once again, Hormel fulfilled the transaction with media buys it would have purchased anyway.