Dive Brief:
- Hain Celestial reported Thursday that it had received a delisting notice from the Nasdaq Stock Market.
- The notice, dated Wednesday, cited Hain's "inability to file its Annual Report on Form 10-K for the fiscal year ended June 30, 2016 by August 29, 2016, as required under Nasdaq's Listing Rule 5250(c)(1)," 4-Traders reported.
- The notice will have "no immediate effect" on Hain Celestial’s trading on the Nasdaq.
Dive Insight:
This is a major turn of events for a company that was just recently at the center of M&A speculation following Danone's takeover of WhiteWave, a competitor in the natural and organic space.
Hain hasn't been entirely delisted — yet. Per Nasdaq rules, the company can submit a plan to regain compliance in the next 60 days. If regulators approve the plan, Hain has to submit the document within 180 days from the annual report’s due date. The report was due August 29, so Hain could remain untouched well into 2017 if it can get its plan approved in the next two months.
If Nasdaq were to delist Hain, it's unclear what the ultimate outcome for the company may be. Past company experiences with delisting are a mix of failures and success stories. Bankrupt companies have been able to bounce back from a delisting, but other companies Nasdaq delisted were on their way out before the stock exchange officially removed their ticker symbol.
In Hain's defense, the company doesn't appear to have been suffering any significant financial troubles. Quite the opposite, Hain's biggest issue was dipping into upper-single-digit sales growth after 20 consecutive quarters of double-digit revenue increases. That's a problem many major food and beverage manufacturers might hope to have at this point.
But it's unclear just how deep these accounting errors go. As Hain continues to postpone the earnings and annual report's releases, doubts among investors could mount.
This is a major turn of events for a company that was just recently at the center of M&A speculation following Danone's takeover of WhiteWave, a competitor in the natural and organic space.