Natural Foods Merchandiser

Money chase continues as 2005 ends

Saying it wants to focus on its core businesses, H.J. Heinz announced Dec. 2 that it will sell its $134 million stake in The Hain-Celestial Group.

Hain filed a registration statement for the 6.1 million shares that Heinz has owned since 1999. That's a 16.5 percent share in the Melville, N.Y. natural foods company.

Heinz, with $10 billion in annual revenue, has long been rumored as a potential acquirer of all of Hain-Celestial, the largest manufacturer in the naturals industry. But Heinz took a $73.8 million charge against third quarter earnings, mostly for a write-down of its Hain shares, and says it plans to focus on its "three core categories of condiments and sauces, meals and snacks and infant nutrition."

In other financial news:

  • Pepsico purchased Stacy's Pita Chip Co. to add another "healthier snack option" to its Frito-Lay snack food portfolio. Terms of the deal weren't disclosed, but Stacy's expects sales of about $60 million this year, according to Purchase, N.Y.-based PepsiCo.

    PepsiCo says Stacy's will continue to be based in Randolph, Mass., as a separate unit of Frito-Lay North America. It employs about 100 people.

    Social worker Stacy Madison and psychologist Mark Andrus founded Stacy's Pita Chip Co. in 1997 as an offshoot of a Boston sandwich shop.

  • Ending confusion for millions of consumers, the parent company of Annie's Homegrown acquired Annie's Naturals in mid-November. Napa, Calif.-based Homegrown Naturals makes the well-known all-natural cheddar bunny snacks and macaroni-and-cheese entrees, but also includes Fantastic Foods vegetarian meals and Consorzio flavored oils, dressings and marinades in its portfolio. "We plan to maintain the integrity of the Annie's Naturals brand by continuing to fully support its values, mission, product quality and focus on strategic product development," said John Foraker, chief executive of Homegrown Naturals. Annie's Naturals, the North Calais, Vt., manufacturer of salad dressings and condiments, will enjoy "a broader platform and greater access to new markets," as a result of the deal, said co-founder Peter Backman. Both Backman and the company's namesake, Annie Christopher, will stay on for at least a year, said Annie's Naturals spokeswoman Jennifer Ingersoll. "They are going to be involved in the transition and integration. Annie is going to oversee product development, not just for her brand but the other subsidiary brands as well." Ingersoll said there will be no changes to any of the recipes. Financial terms of the deal were not disclosed.
  • And one more Annie—Annie Chun, that is—was purchased by a large corporation. Founded in 1992 by South Korean immigrant Annie Chun, the company sells natural Asian convenience foods throughout North America and in some parts of Europe. CJ Corp., based in South Korea, purchased a 70 percent stake in Annie Chun's for $6.08 million, according to Asia Pulse. "The takeover is designed to penetrate the processed food market in the United States," said Kim Ju-heong, a senior official from CJ Corp.
  • Ginger brew maker Reed's Inc. will put together an $8 million initial public offering of stock shares, direct to consumers, via bottleneck tags.

    The unusual offering is priced at $4 a share. The El Segundo, Calif., company, which posted sales of more than $10 million, says it will trade on the Nasdaq exchange and use the proceeds to expand distribution in mainstream stores, build marketing and expand its draft root beer and cream soda lines.

    Reed's began raising capital by running an ad in the November Utne Reader , spokesman Nicholas Gehrig said. Brookstreet Securities of Santa Monica, Calif., is the underwriter.

  • Facing millions of dollars in claims imposed by the Federal Trade Commission, Window Rock Enterprises, the Brea, Calif., maker of CortiSlim, filed for Chapter 11 bankruptcy protection.

    CortiSlim founders Shawn Talbott and Thomas Cheng settled with the FTC for $4.5 million earlier this year. But regulators are still seeking $160 million from Window Rock for what the FTC's 2004 suit called "weight-loss and disease prevention claims [that] fly in the face of reality."

    Window Rock has potential liabilities of about $200 million against cash assets of about $8 million. Chapter 11 bankruptcy protection allows a company to keep operating while it negotiates with creditors.

    "Window Rock has worked hard to resolve the FTC's concerns," new Chief Executive Officer Adam Michelin said in a statement announcing the bankruptcy action.

    Additional reporting by Laurie Budgar.

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