Activist investor Glenn Welling and his California-based hedge fund Engaged Capital have disclosed a 9.9 percent stake in Hain Celestial Group Inc.
Shares of Hain Celestial, the Lake Success-based organic and natural products maker, rose 8.56 percent to close at $38.82 Friday after Engaged Capital said in a securities filing Thursday afternoon that it would seek to replace seven directors of the existing Hain Celestial’s eight-member board.
Engaged said in the filing it had discussions with the company’s board and may continue discussions. It submitted seven candidates for election to the board at the next annual meeting of stockholders.
Engaged Capital, based in Newport Beach, California, suggested that it could lobby for various changes at Hain Celestial, including a sale of the company as a whole or in parts.
A representative for Hain Celestial didn’t respond to requests for comment. Welling also did not respond to requests for comment.
Engaged Capital’s stake of 10.35 million shares is larger than the biggest previously disclosed stake in Hain Celestial, 8.5 million shares, or 8.2 percent, by investment firm BlackRock as of March 31, according to data from Bloomberg.
Engaged Capital accumulated its shares in Hain Celestial between May 1 and June 28, according to the filing. The fund invests in what it calls, “undervalued, premium assets” with market values between $500 million and $8 billion.
Shareholders could benefit from Engaged Capital’s stake in Hain Celestial, Zain Akbari, an analyst for Morning Star Investment Services, a Chicago-based investment research firm, said in a note to clients. A strong board could press the company’s leadership to pursue activities that maximize shareholder value, such as focus on its core food brands, he said.
Hain Celestial could divest its personal-care business, including the Jason, Alba Botanica, and Live Clean brands, Akbari said.
Earlier this month, Engaged Capital won control of Rent-A-Center Inc.’s board of directors. Engaged Capital owned 20.5 percent of the Plano, Texas-based company.
Last week, Hain Celestial released several quarters of long-delayed financial reports.
The company said a review of its accounting resulted in “immaterial” revisions to previously announced results. But net income for the first nine months of fiscal 2017, ended March 31, fell more than 50 percent from the prior year to $67.12 million.
Net income for fiscal 2016 ended June 30, 2016, fell more than 70 percent to $47.43 million.
Hain Celestial’s brands include Celestial Seasonings tea, Earth’s Best baby food, Terra chips and Spectrum oils.