- Hain Celestial faces a board overhaul from activist investor Engaged Capital that recently won a similar case against Rent-A-Center, according to The Wall Street Journal.
- The California-based hedge fund disclosed in securities filings Thursday that it controls about a 9.9% stake in the natural and organic product manufacturer, and as the largest single voting group, nominated seven candidates to Hain's eight-member board.
- Engaged Capital, whose confidential treatment expired Thursday, also said it could pressure Hain to sell, the Wall Street Journal said.
After Hain Celestial named a new CFO and straightened out its long-delayed financial troubles, things seemed to be improving for the one-time Wall Street darling. This week, Hain's Cultivate Ventures incubator acquired food startup Better Bean, a maker of eight varieties of chilled prepared beans and bean-based dips that are gluten-free, certified vegan and Non-GMO Project verified.
Now, Hain is thrown back into a state of uncertainty. Engaged Capital has a record of success, recently winning a similar case against Rent-A-Center where it won three seats on the company's board. It remains to be seen how active Engaged will be with Hain, but the sizeable stake it has amassed is an early sign that it's probably not going away anytime soon.
The news comes at a time of similar disruption for Nestle.The chocolate giant plans to buyback about $21 billion worth of its shares and focus its capital spending efforts on high-growth food and beverage categories such as coffee, pet care, infant nutrition and bottled water. Nestle wasn’t expected to deliver an update to shareholders until September. However, its plans were fast-tracked following investor pressure after billionaire activist investor Daniel Loeb’s Third Point hedge fund purchased 1.25% of the company's shares and issued a letter on changes the firm should make to its business
The challenges Nestle is facing are common throughout the food industry, where businesses are facing slowing growth as consumers flee processed foods in favor of fresher items made with all-natural ingredients. As the involvement by Loeb and his hedge fund show, outside influence can force companies to overhaul their operations much faster than they originally intended.
It will be interesting to see if Hain reacts in a similar fashion, or trudges on against the headwinds that are pummeling food and beverage companies. One thing is certain, if Hain thought it had time to take a breath, Engaged Capital had other ideas.