Hain Celestial has agreed to sell all of its equity interest in its protein business, Hain Pure Protein Corporation, to Aterian Investment Partners III for $80 million.
The announcement of the sale came on the same day as Hain Celestial posted a net loss of $65.8 million for its third quarter ending March 31, as opposed to net income of $12.7 million for the same quarter a year before. Also, its Hain Pure Protein posted a drop in net sales of 25 percent, compared to a year before, falling to $88.7 million.
Since the early months of last year, Hain had stated that it was exploring the possibility of the sale as part of its plan to streamline its business, and amid rumors that it would be an initial step toward the sale of the entire company.
“While we continue to believe this is a highly attractive business with very good growth potential … we have determined it is not core to our go-forward strategy,” CEO Irwin Simon told analysts in February 2018.
The deal, which is expected to close on June 30, includes the FreeBird and Empire Kosher businesses. It is the third brand sale for Hain in the past three months from its massive 55-brand portfolio.
“We are pleased to have entered into an agreement for the sale of our remaining Hain Pure Protein businesses,” said Mark L. Schiller, president and CEO, Hain Celestial. “This divestiture is another step forward in simplifying our organization aligned with our transformational strategic plan as we aggressively pursue margin enhancing initiatives to fuel long-term sustainable growth and profitability.”
“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.”
Despite growing into a multi-billion dollar natural and organic food company, Hain Celestial has faced years of challenges stemming from its hard-to-manage scale. In 2016 the company launched Project Terra, a plan to weed out its offerings and to focus investments on its top 500 products in the U.S. in order to generate cost reductions and strengthen its bottom line.
In the years since, the company has faced a string of issues including needing to delay the release of its Q4 earnings report in 2016 due to accounting problems; the company founder, president, and CEO Irwin D. Simon stepping down last year and being replaced by Mark Schiller; and increased competition once Amazon bought Whole Foods.
Despite its setbacks, the sale of its protein business will serve Hain well by providing the capital needed to improve its balance sheet and pay down its debt.
-Lynda Kiernan