Hormel Foods Corporation (NYSE: HRL) yesterday announced it has reached a definitive agreement to acquire the assets of Diamond Crystal Brands nutritional products. Diamond Crystal Brands nutritional products (DCBNP) is a business of Diamond Crystal Brands, Inc., a wholly owned subsidiary of Imperial Sugar Company, which on January 16, 2001, voluntarily filed petitions in the U.S. District Court in Wilmington, Del., under Chapter 11 of the U.S. Bankruptcy Code. The transaction is valued at approximately $65 million in cash, subject to certain post-closing adjustments, and requires the approval of the bankruptcy court.

Hormel Foods will combine the assets of DCBNP with its Hormel HealthLabs subsidiary. Along with the acquisition of Cliffdale Farms, which closed December 1, 2000, this acquisition will strengthen the position of Hormel HealthLabs in the nutritional products market, making the company one of the industry’s leaders with sales in excess of $100 million.

Certain regulatory approvals have already been received, including necessary clearances under the Hart-Scott-Rodino Act, and the transaction is expected to close sometime during the second calendar quarter of 2001. Salomon Smith Barney, New York, N.Y., acted as financial advisor to Hormel Foods. Dorsey & Whitney LLP, Minneapolis, Minn., acted as external legal counsel to Hormel Foods.

DCBNP, headquartered in Savannah, Ga., sells a variety of nutritionally enhanced products to foodservice customers, primarily hospitals and nursing homes. The company had sales of approximately $63 million in its most recent fiscal year. DCBNP’s product line has more than 170 items, including thickened ready-to-serve juices, frozen pureed meats and entrees, fortified shakes and breakfast mixes, ready-to-serve instant breakfasts, low sodium sauces and gravies, salad dressings and other condiments.

“With the addition of the DCBNP product line, customer base and distributor relationships, Hormel HealthLabs substantially strengthens its position in the marketplace for nutritionally enhanced food products,” said Joel W. Johnson, chairman of the board, president and chief executive officer of Hormel Foods Corporation. “DCBNP enjoys a reputation for flavorful, quality products and brings us a valuable portfolio of proprietary formulations for nutritionally enhanced foods.

“There is a rapidly expanding demographic opportunity involving the growing senior population. With this acquisition, we plan to expand upon our experience and leadership role in the institutional health care market,” continued Johnson.

DCBNP currently offers a broad line of thickeners and thickened and pureed products. These products are primarily for patients who need texture-modified foods, such as those with dysphagia (swallowing difficulties). In this category, DCBNP provides tasty and nourishing juice, meat and entree products.

DCBNP’s dry and ready-to-serve products include fortified shake and breakfast mixes, instant breakfasts, puddings, low-sodium sauces, soups and gravies required by dietitians to meet the special dietary needs of patients. These products provide a high level of nutrients to patients at risk of malnutrition in good-tasting, visually appealing, economical and easy-to-use formulations.

DCBNP also offers a line of frozen supplements that includes fortified shakes, dessert cups and cookies and frozen prepared entrees. These frozen fortified products are widely used in hospitals and nursing homes nationwide.

About Hormel HealthLabs

Hormel HealthLabs, a subsidiary of Hormel Foods Corporation, markets flavorful foods for people with special dietary needs, such as dysphagia, bowel problems, malnutrition and diabetes. Products are marketed to hospitals, nursing homes and other health facilities. Originally known as American Institutional Products (AIP), the business was acquired in 1994 and the headquarters subsequently relocated to Austin, Minn. In December 2000, Hormel HealthLabs acquired the business and production facility of Cliffdale Farms, located in Quakertown, Pa.

Forward-Looking Statements

This news release contains forward-looking statements based on management’s current views and assumptions. Actual events may differ. Statements regarding the expected benefits of the transaction are subject to the following risks: that expected benefits will not be achieved or may be delayed; that revenues following the acquisition will be lower than expected; that the businesses will not be integrated successfully or in a timely manner; the inability to successfully identify, develop and market new products and services; increased competition and its effect on the combined companies; that general economic conditions, either nationally or in the states in which the combined companies will be doing business, will be less favorable than expected; the general risks associated with the companies’ business; and that legislation or regulatory changes adversely affect the businesses in which the combined companies would be engaged. Forward-looking statements included in this press release speak only as of the date hereof.