(Bloomberg Gadfly) -- As Amazon.com Inc. swallows Whole Foods Market Inc., one of the chain's suppliers may not remain on its own for long. After years of takeover speculation fake-outs, it seems The Hain Celestial Group Inc. is finally well on the way to a deal.
Shares of the organic, better-for-you foodmaker -- the niche industry's only large publicly traded pure-play not yet acquired -- closed at a four-year low just a week ago. On Thursday morning, a Jefferies Group analyst who recently met with Hain's managers, including its founder, said in a report that he thought they were open to takeover offers or other strategic moves as the cloud of an accounting review begins to clear.
Like clockwork, 10 hours later, experienced activist Engaged Capital unveiled a 9.9 percent stake in Hain and said it was ready to replace seven of the board's eight members and push for a sale, in whole or in parts.
This has been a long road for Hain shareholders. Unlike many brands in the better-for-you food trend, Hain has been around awhile. It was formed in 1993, long before the labels "organic" and "all-natural" meant much to most shoppers beyond being more expensive. Back then, Whole Foods generated less than $400 million in annual sales, compared with nearly $16 billion now. Hain's products are sold at Whole Foods, Wal-Mart Stores Inc. and other retailers. They include everything from Alba Botanica and Jason hair and skin products to Dream almond milk, Terra vegetable chips and Celestial Seasonings teas.
But while the $3.7 billion company should have been living its best self the past couple of years, its moment was derailed by an untimely accounting probe beginning last August. And that came just after shareholders watched two of Hain's closest peers -- WhiteWave Foods and Boulder Brands -- receive juicy takeover offers.
Hain's stock slumped as it delayed financial statements to evaluate whether some revenue had been recorded correctly. Last week, it closed the books on this review without making any material changes, but an investigation by the Securities and Exchange Commission is continuing, and the stock is still down about 30 percent since the probe began.
The list of possible Hain bidders could be long. Packaged-food behemoths are desperate for deals to spur anemic top lines. Hain's brands have plenty of room to grow, with Amazon's $13.7 billion takeover of Whole Foods raising hopes for even wider reach. Engaged Capital's presence inspires further confidence in the company's prospects.
But it may be more likely that Hain -- given its array of products -- gets bought in pieces. In that case, it could even see interest from companies less inclined to make large acquisitions but possibly interested in certain brands, such as Campbell Soup Co. and Hormel Foods Corp., which bought Applegate Farms in 2015.
Even so, I wouldn't rule out a takeover by Kraft Heinz, given its desire to do a big deal soon and a shrinking list of worthy candidates. Kraft Heinz is controlled by private equity firm 3G Capital and Warren Buffett's Berkshire Hathaway Inc., which is eager to spend an ever-growing cash pile on high-return acquisitions. And if anyone is capable of getting Hain's finances in shape, it's 3G.
In Pinnacle's Boulder Brands purchase and Danone SA's acquisition of WhiteWave, both paid more than 23 times the target company's trailing 12-month Ebitda. Even if Hain could fetch "only" 20 times Ebitda -- still an incredibly rich price -- it would imply an offer of about $46 a share. That's an additional 18 percent boost on top of Friday's surge. If Engaged Capital gets its board seats at the November meeting and can help drive growth and margin improvement while also restoring faith in the company's earnings quality, then Hain's takeover or breakup value may rise even more, approaching pre-selloff levels.
In any case, frustrated shareholders just need to be patient a little bit longer because positive changes are in store.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Tara Lachapelle is a Bloomberg Gadfly columnist covering deals. She previously wrote an M&A column for Bloomberg News.