- Hain Celestial said Monday that founder, president and current CEO Irwin D. Simon will become non-executive chairman of the board upon hiring a replacement, according to a company release.
- The natural and organic company's board of directors has partnered with an unnamed global executive search firm to select a successor for CEO. This individual will work closely with Simon during the transition.
- "This is an exciting time of business transformation for us as we build upon our considerable achievements and advance our strategic growth and cost savings objectives via Project Terra to create shareholder value," Simon said in the release. "I firmly believe that some of our greatest opportunities lie ahead, and I am confident now is the right time for our next generation of leadership."
The shifting of power from Irwin D. Simon, who founded Hain Celestial 25 years ago and shaped the company into the natural and organic giant it is today, to a newcomer could bring some validity to the takeover rumors that have swirled around the firm for years.
Hain has had its fair share of financial struggles. In its most recent fiscal quarter the company' s earnings of $73.4 million came far below analyst estimates of $92.8 million. Operating income in the U.S. fell 44% from the year-ago-period to $25 million as higher freight and commodity costs — plus increased marketing spend — squeezed the manufacturer.
Last year, activist investor Engaged Capital took a 9.9% stake in the company. Engaged, which has pushed the company to revive top line growth, last year nominated six new directors — another three individuals agreed to not run for re-election — as part of a deal reached with Engaged Capital. Hain launched Project Terra, a SKU rationalization project, to streamline its massive product portfolio and focus on investing in its top 500 U.S. products in order to improve performance.
Those efforts haven't kept the sharks from circling. Last week, the New York Post reported that chicken producer Pilgrim's Pride is making a bid for Hain's protein business. The Post reported that the company is selling its chicken and turkey division to make the company more attractive to a buyer. The segment generates $475 million in revenue and makes up 15% of Hain's total profit.
It's unclear if there are any food players currently vying for a purchase of the entire company. Nestlé was rumored to be angling for an acquisition last year, on the condition that its chicken and turkey segment were divested first. The fact that Pilgrim's is sniffing out that division, combined with the news of Simon's impending departure from his role as CEO, could suggest that a deal is forthcoming.
Founded in 1993, Hain has acquired more than 55 brands, including BluePrint juice, Celestial teas and Garden of Eatin snacks. Hain's diverse portfolio makes it hard for one company to want to acquire the entire business if many parts of the operation wouldn't complement their existing business.
It remains to be seen if Hain will sell its protein segment to Pilgrim's Pride, and if this move will lure Nestle or another company back to the fold. If the food giant doesn't make a move, Hain will likely need to make further changes to attract a suitor.