Hain to Acquire Spectrum Organic

MELVILLE, N.Y.--Hain Celestial Group Inc. (NASDAQ:HAIN) entered into an agreement to purchase Spectrum Organic Products (OTCBB:SPOP) for a total of about $34.5 million. SPOP shareholders will receive an estimated $0.705 per share in a combination of cash and HAIN stock. The actual exchange ratio will be based on the average closing price of HAIN stock for a 10-day period ending shortly before the acquisition closing date, which is expected to be in the fourth quarter of 2005. The transaction is subject to approval by SPOP shareholders.

Jethren Phillips, founder and chairman of Spectrum, said the acquisition with Hain, which maintains a strong presence in natural foods and other key channels, will enable Spectrum to more rapidly and efficiently expand its product lines, which include natural and organic culinary oils, vinegars, condiments and butter substitutes.

Spectrum has been a well-respected marketer and producer of natural and organic oils in natural food channels for many years, said Irwin Simon, president and chief executive officer (CEO) of Hain. Adding their range of offerings in this category to Hain Celestials existing portfolio gives us another opportunity to offer our customers additional category-leading products.

In addition to Spectrum Naturals and Essentials businesses, the acquisition also includes Spectrum Ingredients, which is outside of Hains traditional manufacturing business focus. As the transaction is still pending, Hain management would not comment on its future plans for the ingredients component, except to say it was interested in the entire Spectrum business, a sentiment echoed in its press release. We look forward to expanding Spectrum Naturals, Essentials and Ingredients businesses, Simon said, in the release.

Spectrum posted revenues of $49.9 million and a net loss of $.83 million for fiscal 2004, as the relocated its manufacturing facility and experienced increased operating expenses. However, sales for the first six months of fiscal 2005 were up 8 percent to $27.7 million, while income was up to $.43 million. As of June 30, Spectrum listed total assets of $22.5 million and liabilities of $15.3 million.

At the time of the announcement, HAIN stock closed at $18.93 per share, and SPOP closed at $0.68 per share.