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. Hormel’s management team turned to ICON.

How ICON Uncovered Value

We offered a stunningly simple solution: ICON purchased both brands outright from Hormel for cash – at full book value (something no other buyer would offer). In return, Hormel placed a 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. Hormel engaged with ICON again, when another brand proved a distraction from Hormel’s 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.

The Results

These transactions worked so well that Hormel asked ICON to structure a new transaction for a corporate jet it no longer needed. ICON offered a significant cash premium above market value. Once again, Hormel fulfilled the transaction with media buys it would have purchased anyway.