KFT Mondelez International, Inc. (MM)

The Hain Celestial Group Inc. (HAIN) recently announced that it has entered into a new unsecured senior credit facility worth $850 million with Bank of America Merrill Lynch and Wells Fargo Bank. The credit agreement is scheduled to mature in August 2017.

This is a strategic financial arrangement for Hain as it provides additional capital and enhances financing flexibility to fund its acquisitions and expand its portfolio of well-known brands. Moreover, the company’s strong balance sheet and cash flow generation enabled it to get the facility at low interest rate levels.

Acquisitions have been a key strategy for Hain, and have significantly helped the company in building market share. These acquisitions have not only widened its geographical presence, but have also furnished opportunities to cross-sell products in the U.S., Canadian and European markets.

The company is on an acquisition spree and made some major acquisitions in fiscal 2012, including the recently announced acquisition of leading packaged grocery brands from Premier Foods plc's.

Earlier, Hain Celestial had completed the acquisition of U.K.-based marketer and manufacturer of fresh and frozen foods, Daniels Group. The company also acquired Cully & Sully Limited in Ireland.

The company is a leader in natural food and personal care products categories with an extensive portfolio of well-known brands. The stock is poised to surge as the economy gradually revives and demand for healthier and natural food steadily rises.

Moreover, Hain Celestial has undertaken a number of initiatives to improve its performance and has put itself on the growth trajectory. The company’s Stock Keeping Unit (“SKU”) rationalization program has helped eliminate SKUs, which had lower sales volume or weak margins. Management remains focused on improving profitability through new product introductions while reducing costs.

Currently, we have a long-term Neutral rating on the stock. Hain Celestial, which competes with General Mills Inc. (GIS) and Kraft Foods Inc. (KFT), holds a Zacks #1 Rank, which translates into a short-term Strong Buy rating.

 
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