Hain Celestial’s acquisition of Premier Foods‘ spreads assets will make the US food group “a scale player” in the UK, a senior executive has claimed.
Rob Burnett, CEO of the company’s UK arm Hain Daniels, said the addition of brands including Hartley’s jellies and Sun-Pat peanut butter strengthens the business “across all food formats”.
“Our announcement today of the acquisition of market leading grocery brands from Premier really establishes to Hain Daniels business in the UK as a scale player across all sectors fresh, chilled, frozen and now ambient grocery,” Burnett said yesterday (22 August), as Hain Celestial discussed the deal with Wall Street analysts.
The GBP200m cash-and-shares deal for Premier’s spreads operations, which also include brands like Gale’s honey, is the second significant acquisition Hain Celestial has made in the UK in ten months.
Last October, the company acquired Daniels Group, a food and drink manufacturer with brands including New Covent Garden Soup Co. The deal led Hain Celestial to name its UK business Hain Daniels, which also supplies the US firm’s longer-standing brands, including Linda McCartney meat-free, to UK multiples.
Hain Celestial said the acquisition of the Premier business will mean it will be the 40th largest food and beverage company in the UK.
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Burnett said the deal will increase the proportion of its branded sales from 40% to 50% and make it the “number one branded provider of fruit and veggie solutions” in the country.
Speaking to analysts, Burnett said Hain Celestial planned to invest in brands that had lacked investment in Premier. He also said Hain Celestial believed some of the brands could be taken into new categories and claimed the deal could help the company bring some of its US brands into the UK.
“The acquisition comes with a real great portfolio of brand leaders that have continued to prosper despite being starved of investment for a number of years in the previous owner. The business has real category scale in spreads and deserts, which can be further strengthened with a focused resourced and dedicated team,” Burnett explained.
“We believe the key brands of Hartley’s and Sun-Pat have the capacity to stretch into new and adjacent categories. The acquisition gives us a scaled modeling grocery, which we expect to expand by introducing complementary Hain US grocery brands such as MaraNatha, Earth’s Best, Rice Dream and many more.”
Analysts welcomed the acquisition although a note of concern came from RBC Capital Markets analyst Ed Aaron. He said Hain Celestial was buying Premier assets at a multiple that was half the level at which the US company was trading.
“One of the concerns that I sometimes I hear is, that maybe you kind of get what you paid for and there is some pushback about whether the quality of the assets that you are maybe buying in UK is as good as what people have come to expect from good natural and organic asset in the U.S?,” Aaron asked.
Hain Celestial president and CEO Irwin Simon acknowledged the Premier assets “really need some spending” but insisted the company was acquiring “strong brands”.
He said: “I think we brought an asset at great value and great categories, and it’s not like we brought a brand where if something happened with Hartley’s that’s your only egg in the basket. If we were here just to buy for the sake of buying it, that’s one thing, but if we are here to buy it, modernise it and help take our old U.K. business to a whole new level, I think that’s where that’s unique and exciting for us.”