Hain Celestial 'mining for gold'

by Monica Watrous
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Hartley's jams, Hain Celestial
Hain’s strategy has evolved to include brands outside of the natural and organic category, including its acquisition of Hartley's jellies and jams.

BOCA RATON, FLA. — The Hain Celestial Group’s acquisition pipeline is “robust,” said John Carroll, chief executive officer of Hain North America.

“The values are not in line with what we’re looking for; however, we’re starting to see valuations go down,” Mr. Carroll said during a Feb. 17 presentation at the Consumer Analyst Group of New York conference at the Boca Raton Resort and Club. “I’ve got a meeting next week on a specific acquisition, and we’re starting to see valuations get more reasonable.”

He added: “Not everybody’s going to get an Annie’s multiple.” (General Mills paid a 22x EBITDA multiple for Annie’s, which was said to be at the high end of publicly disclosed food transactions in recent years.)

In addition to identifying opportunities for “great, accretive bolt-on acquisitions” in the United States, Lake Success, N.Y.-based Hain Celestial said it continues to discover strong prospects in Canada and the United Kingdom.

“We like to call it ‘mining for gold,’” said Pat Conte, executive vice-president and chief financial officer of the Hain Celestial Group, Inc. “We look at what we believe are leading, on-trend brands and categories, which fit our core values of better-for-you. We’re disciplined in our approach for making accretive acquisitions. We expect to drive through our distribution channel and/or leverage the targets, as we always look for sales, supply chain and (general and administrative) synergies.

“We’re still very active in looking at acquisitions and seeing more and more opportunities that fit our strategy.”

Hain’s strategy has evolved in recent years to include brands outside of the natural and organic category, where the 23-year-old company is rooted. A recent example is Hartley’s, a brand of jellies and jams Hain acquired in late 2012. The products are not positioned as natural or organic; however, the company is introducing new reduced-sugar varieties to meet demand for healthier options in the U.K., where the products are sold.

“…as you look in Europe, ‘organic’ is not the key term they’re looking for,” Mr. Carroll said. “They’re actually looking for better-for-you, or less this; less that. Free-from. So, what you see is, when we talk about our mission, our mission is to become the manufacturer, seller and marketer of organic and natural and better-for-you products.”

Added Mr. Conte: “(Our) acquisition strategy is to get into that category and make it a better-for-you category — as we look to get fruits into jellies, to get sugar out of the jellies, make them more healthier, better-for-you products.

“So, it’s not just (that) you get the scale… hopefully, you push out your values, and that’s what we’re looking to do.”
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