Organic and natural products company The Hain Celestial Group, Inc., has entered into a definitive agreement to sell all of its equity interest in Hain Pure Protein Corporation to Aterian Investment Partners III LP (“Aterian III”) for a purchase price of US$80 million, subject to adjustments. The Hain Pure Protein Corporation portfolio includes the FreeBird (organic chicken) and Empire Kosher businesses. The transaction is expected to close before June 30, 2019, the end of the company's fiscal year.
“We are pleased to have entered into an agreement for the sale of our remaining Hain Pure Protein businesses,” comments Mark L. Schiller, Hain Celestial's President and CEO. “We expect the sale of Hain Pure Protein to also help improve our balance sheet as we generate cash from the sale with which we plan to use in part to pay down debt. We believe these non-core brands will generate better results under the ownership of an organization that is focused on the protein category.”
As previously disclosed on May 5, 2018, the results of operations, financial position and cash flows related to the operations of the Hain Pure Protein business segment have been classified under “discontinued operations” of Hain Celestial’s current and prior financial statements. Net sales for Hain Pure Protein in its third fiscal quarter were US$88.7 million, a decrease of 25 percent compared to the prior year period. Net loss from discontinued operations, net of tax in the third quarter, was US$75.9 million and included a US$40.0 million non-cash impairment charge and a loss on sale of US$29.7 million.
Hain Pure Protein Corporation’s acquisitor, Aterian III, was officially launched by Aterian Investment Partners, an operationally-focused middle market private equity firm, in May 2018. The fund’s first and final closing was held in July 2018 with more than US$350 million of aggregate committed capital.
Through Aterian III, Aterian is continuing its focus on investing in proven franchises generating between US$25 million to US$500 million of revenue and providing resources to further enhance operations, growth or investment initiatives. Since its founding in 2009, Aterian has closed on three private equity fund partnerships totaling more than US$715 million of aggregate committed capital.
Other recent divestitures
The move to sell Hain Pure Protein Hain follows at the heels of Hain Celestial’s divestiture of its WestSoy tofu, seitan and tempeh businesses to Keystone Natural Holdings, a portfolio company of Keystone Capital focusing on plant-based food. The divestment did not include the WestSoy plant-based beverage business, which has been retained by Hain Celestial. Terms of the transaction have not disclosed, but Schiller notes that the divestiture is in line with the company’s ambitions to “reduce complexity and streamline our portfolio of brands.”
Hain Celestial sees global net sales dip
Notably, across its global markets, Hain Celestial Group has seen a year-on-year decrease in overall net sales, as exhibited in its Third Quarter Fiscal Year 2019 Financial Results, issued on April 9, 2019. In the report, the company’s third quarter closed with the following highlights:
Net sales decreased 5 percent to US$599.8 million compared to the prior year period.
Adjusted gross margin of 21.6 percent, a 140 basis point decrease over the prior year period and a 130 basis point increase from the second quarter of fiscal 2019.
Adjusted operating income of $38.9 million compared to $56 million in the prior year period and $29.9 million in the second quarter of fiscal 2019.
Adjusted net income of US$21.7 million compared to US$38.6 million in the prior year period and US$15 million in the second quarter of fiscal 2019.
Adjusted EBITDA of US$55.5 million compared to US$73.4 million in the prior year period and US$44.9 million in the second quarter of fiscal 2019.
Adjusted EBITDA margin of 9.3 percent, a 230 basis point decrease compared to the prior year period and a 160 basis point increase from the second quarter of fiscal 2019.
US segment third quarter net sales of US$266.4 million decreased 5 percent over the prior year period.
UK segment third quarter net sales of US$227.2 million decreased 5 percent over the prior year period.
“Rest of World” segment third quarter net sales of US$106.1 million decreased 6 percent over the prior year period.
