Why Hain Celestial's Acquisitions Consistently Perform

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Brendan Byrnes: You mentioned acquiring all the brands that you did. Historically Hain Celestial's (NASDAQ:HAIN) 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.

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.


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