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Heinz goes organic
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September 27, 1999: 8:51 a.m. ET
Investing $100M for minority stake in natural foods maker Hain Food Group
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NEW YORK (CNNfn) - H.J. Heinz Co., known for its ketchup and pickle products, agreed Monday to buy a nearly 20 percent stake in natural foods producer Hain Food Group for about $100 million.
Heinz said the deal was based on a per-share price "in excess of" Hain's closing price of $28.44 on the Nasdaq exchange Friday, but did not provide a specific per-share price. Heinz (HNZ) said it was buying 3.5 million shares, equal to a 19.5 percent equity stake in the Uniondale, N.Y.-based maker of products including Westsoy soy beverages and Health Valley cereal.
Also as part of the deal, Hain (HAIN) will acquire the trademark and name of Heinz's Earth's Best organic baby food brand.
Pittsburgh-based Heinz, known for its namesake brand of foods as well as StarKist, 9-Lives, Weight Watchers and other brands, said the investment commits it to the natural and organic food market. The market already is a $20 billion business in the U.S. that is growing at a rate of at least 15 percent per year, the companies said.
"We will marry Heinz's great strength and sale in low-cost international procurement, manufacturing and logistics with Hain's talent and success in the marketing, sales and distribution to specialty food outlets," Heinz CEO William R. Johnson said.
The companies said they hoped to drive European sales in particular through the deal.
The two companies have worked together since 1997 on product marketing. Hain manufactures and sells some Weight Watchers products through a licensing agreement with Heinz, and has bought Heinz's Alba Foods line of dry milk products, cocoa mixes and dairy shakes.
The deal is subject to regulatory approval.
Stock in Heinz added 1 to close at 43-1/16 Friday.
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