GLOBAL MARKET SEGMENTATION | Award Winning Investment Bank

GLOBAL MARKET SEGMENTATION

DelMonte

Del Monte Corporation was being acquired by a consortium consisting of Merrill Lynch and Citicorp Investment. As part of the team assigned in structuring the senior debt, we needed to find a way to reduce debt quickly, but asset sales weren’t available as a solution. The fresh fruit business has already been sold by RJR, leaving the processed (canned) food business left.

We suggested and assisted in crafting a unique sale of the geographic rights to the intellectual property and distribution rights to the Del Monte name: a global market segmentation and sale of IP. As a result, the company was divided up into U.S., Far East, and European companies and the Far East and European companies were sold to reduce the acquisition debt. The perpetual license was virtually unknown for a company of this size and type. The provisions of the licensing agreement which protected the brand equity has withstood the test of time.

Shortly after the first anniversary of the buyout, with the reduction of the debt from $1.075 billion to $485mm due to the asset sales of the geographic rights, a refinance was needed. The subordinated debt market was deteriorating, and the market was unreceptive to unsecured subordinated debt.

We proposed that the junior debt be given a lien in the bank’s collateral. This had never been done before, and innovative work on the collateral agency workout mechanisms had to be designed. As a first of its kind which addressed a market need, it became the prototype for the ratable treatment of public debt with bank debt, and the predecessor to the now common second lien loan.

For more see:  Strategic Marketing
                        Industry Segment Analysis

Mergers and Acquisitions Industry Analysis



GLOBAL MARKET SEGMENTATION AND SALE OF IP

– To create an asset sale program, we conducted a global market segmentation and sale of IP with distribution rights.


Selling a company using its IP geographically

– Selling a company by licensing its IP was an innovation at the time.