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November 21, 2017

Nestle linked with takeover bid for Hain Celestial

Nestle is being linked with a possible takeover of US natural and organic products group Hain Celestial.

By Leonie Barrie

Nestle is being linked with a possible takeover of US natural and organic products group Hain Celestial.

Citing unnamed sources, newswire Bloomberg said Nestle is among companies exploring a purchase of Hain Celestial, which owns brands including Ella’s Kitchen baby food, Tilda rice and Linda McCartney vegetarian dishes.

Bloomberg said it had been told by the sources Nestle has held preliminary talks about buying all or parts of Hain Celestial, but other companies, including US food makers and buyout firms, are also interested in making a bid.

The newswire said representatives of Hain Celestial had not immediately responded to requests for comment while Nestle declined to comment.

Hain Celestial, which generates the bulk of its sales in the US and the UK, reported turnover of US$2.8bn for the 12 months to the end of June, down 1.1% on a year earlier. Operating income was $111m, compared to $150m in the previous 12 months. The company made a net income of $67.4m, against $47.4m the year before.

The results were issued in the same month Hain Celestial published its figures for the previous fiscal year, which were delayed because of a review into its accounting.

While the delay was associated with a review into certain “concessions” made to US distributors, Hain Celestial said it also found “immaterial errors” in previous financial statements that led to adjustments having to be made.

In September, Hain Celestial announced it had entered a “mutual cooperation” deal with activist investor Engaged Capital, which had taken a 10% stake in the Earth’s Best baby food and Greek Gods yogurt maker in the summer.

Engaged Capital, founder and CEO Glenn Welling joined the Hain Celestial board and Bloomberg said he had been pushing for changes, including a sale.

In recent years, Hain Celestial has seen some pressure on its sales in the US – the company’s largest single market – as conventional food manufacturers muscle in on the country’s growing natural and organic sectors.

Nestle also has an activist investor amongst its shareholders in the shape of Third Point’s Daniel Loeb, who said in October there is still more of an opportunity for new chief executive Mark Schneider to “unlock value” at the world’s largest food maker.

This year, Nestle has invested in what it sees are faster-growing parts of the US food sector, snapping up vegetarian foods business Sweet Earth. It is also looking to sell its US confectionery business.

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