Why The Hain Celestial Group, Inc. (HAIN)’s Acquisitions Consistently Perform

The Motley Fool’s chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in our brand-new free report: “The Motley Fool’s Top Stock for 2013.” I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.

Brendan Byrnes: You mentioned acquiring all the brands that you did. Historically The Hain Celestial Group, Inc. (NASDAQ:HAIN)‘s been a highly acquisitive company. Also we’ve seen you go on a recent string of acquisitions in the U.K., but one of the companies you acquired was the Greek yogurt label, Greek Gods, and its sales have tripled since 2010, so can you kind of go over your strategy as far as what you look for in potential acquisitions and then how you’re so consistent with getting the most out of these acquisitions when some think you overpaid for them.

The Hain Celestial Group, Inc. (NASDAQ:HAIN)Irwin Simon: Well, and I don’t know how they came up with that decision that we overpaid. Number one is discipline. People say to me, what are some of your best deals? Some of the best deals were ones we didn’t do and walked away from. We walked away from numerous deals where I felt they were not creative, they were not strategic, they were not the right deals for us, they couldn’t add value. But I look at Hain and you can do analysis, you can do paralysis, but you’ve got to look at the big overall picture, and I’m one that gets to look at the big picture, how it represents the whole company.

In 1999, when we acquired Earth’s Best, and I like going back to Earth’s Best, it was a $14 million business. It was owned by H.J. Heinz and you had Gerber coming into the category with a brand called Tender Harvest. Gerber’s was a big baby food, a seven, eight hundred million dollar baby food, and Earth’s Best was getting its behind kicked. With that, we retrenched, only focused on natural food stores, and today Earth’s Best is probably the largest natural, organic baby food company there is within the U.S. if not the world. I was told you can’t beat Gerber. But we were not into conventional baby food; it was not our intention to beat Gerber. It was our intention to grow the largest natural organic baby food company.

I as an individual am about brands, brands, brands. I would say this here, brand equity, brand equity, brand equity. In regards to acquisitions; so I have never started a company from scratch, started a brand from scratch like Celestial Seasonings, Terra Chips or whatever. My philosophy is number one, go out and find a good brand in a good category where an entrepreneur has created something already. And with our marketing expertise, with our distribution expertise, which is operational expertise, how do we take it to the next level? And to find something where they’ve gone out and made the mistakes, they’ve done a lot of the groundwork, maybe burned through all their money and how do we then take it to the whole other level and put our experience behind that, and that’s one of the things we’ve done.

I’m very disciplined on what we’ll pay for acquisitions because there’s nothing worse than doing a bad acquisition and really overpaying for it. There are times you just don’t recover from that and you see companies do that. what also is very important to us is when I look at Hain I kind of say this here, Okay, if this was waterfront property and I owned a piece of waterfront, I owned a piece of property on the waterfront, if I keep buying up property along the waterfront, each piece becomes more valuable because I own most of the waterfront. And that’s what I look at if we buy a company, how does it help the overall company and how do we continuously to create value? Because what you don’t want to do is go out and do an acquisition that’s dilutive, it’s not fair to your other brands. You don’t want to go out and do an acquisition; there’s no growth because your accretion on growth from the other brand. And with that, how do you go out and take a product that you really could utilize your infrastructure of sales, marketing, distribution, procurement and how does that fit in? So we don’t buy something that doesn’t fit with what we’re doing today; it would not make sense.

So they are very much the disciplines and again, at the end of the day, the financial disciplines really, really are key to it. It’s not just to say, We did another deal. What I never wanted us to become were acquisition junkies.

The article Why Hain Celestial’s Acquisitions Consistently Perform originally appeared on Fool.com and is written by Brendan Byrnes.

Brendan Byrnes has no position in any stocks mentioned. The Motley Fool recommends Hain Celestial. The Motley Fool owns shares of Hain Celestial.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!