After WhiteWave, Is Hain Celestial Next in Line to Be Acquired?

The food sector is consolidating and the number of mergers and acquisitions should increase going forward. Recently, it was reported that Danone, the world's largest yogurt maker, has agreed to buy WhiteWave Foods (WWAV) in what would be the French company's largest acquisition in 10 years.

I have been bullish on WhiteWave Foods, however the timing of my last buy call was way off, which is why investors who followed my lead would not have made much money after the buyout.
Danone paid a big premium for WhiteWave Foods, but investors will have more M&A plays to bet on in the food sector.

I have always said that buying a stock in the anticipation of a buyout is never a good strategy. Investors should always look for strong fundamentals, and the potential of a buyout should always be an added bonus. Keeping that in mind, I think Hain Celestial (HAIN) makes for a good buy going forward.

I have made the long case for Hain Celestial several times in the past and I am still bullish on the stock. I won’t repeat the reasons for my bullishness, but will focus on the potential acquisition of Hain Celestial.

Like WhiteWave, Hain Celestial has always rumored to be a potential takeover target for several companies. In my opinion, General Mills (GIS) will likely consider acquiring Hain Celestial in the near future. General Mills recently separated its growth business and slower-growth business and said it will allocate more funds behind organic and natural brands.

Hain Celestial fits the bill perfectly for General Mills, especially since the stock has been in a downtrend over the past year. Going by the premium that Danone paid for WhiteWave Foods, Hain Celestial should see an acquisition offer above $70 per share. This represents a 20%+ upside from current levels, and would make Hain Celestial a great buy for speculative investors.

Conclusion

Hain Celestial is currently a lot cheaper than WhiteWave Foods, which is why I think the company is ripe for a takeover. Due to the company’s undervaluation and the consolidation of the food industry, I think an acquisition is very likely in the near future. General Mills is the most likely suitor, however I am sure Hain Celestial will have other companies bidding for it down the road.

Even without a potential acquisition, Hain Celestial looks like a decent buy at current levels. The stock can continue moving higher and the company can function terrifically on a standalone basis. However, the chances of the company getting acquired are high.
Published on Jul 11, 2016
By Ayush Singh

Copyrighted 2016. Content published with author's permission.

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