[Beginning of Cramer's verbatim comments for this segment...]

Jim:        Memo to Kraft… that is right, Kraft Foods (KFT)… you guys are making a huge mistake trying to buy Cadbury… come on… we want food that is good for you… not candy that is bound to be the target of a snack pack someday… especially given that the Bolsheviks have seized… especially given that the Democrats run Washington… and I know the Politco leader, Nancy Pelosi… alright I got to get this right, I will get this right… the Speaker of the Peoples Soviet… the Speaker of the House would like to implement one of these taxes on candy… and this junk… Kraft, and by extension any other serious player in the food space, should forget about candy...

Mergers and acquisitions are heating up again… and I have got one of the best take over targets in the food industry… and that name is The Hain Celestial Group, Inc. (HAIN)… people want natural and organic foods… they want stuff that is healthy… or at least seems healthy… and that is Hain… it has got numerous different products across the whole spectrum of natural foods… and personal care… Celestial Seasonings Tea, you know that, right… Earth Baby Food, I mean come on… you are going to feed them that other stuff… Tara Chips, wow General Tso has got his own line… culinary oils, condiments, butter substitutes… this is a play on all of the people who are going not just vegetarian… but vegan… and replacing everything dairy with soy... and as sad as that trend may sound… and believe me… it is sad, as a Dad that struggles to find anything that my vegan kids will eat anymore… we used to go to Friday’s.

Hain is the future… past Cadbury… future Hain… speaking of past, steak too… anyway, I want a shotgun wedding between Kraft and Hain… why?… because as we know from stocks seer, and also at one point deathly too pregnant singer… am I paper planes… shotgun weddings make us money… when I look at food companies there is one purely and absolutely anecdotal measure that I like to use to measure a companies importance.. and do you know what that is?… it is called shelf space… that is the equivalent in that business of horse sense… these companies are all involved in a grueling trench warfare, fighting tooth and nail for inches and feet of space in the supermarket to sell their merchandise… so what did I do… in the essence of empirical and scientific evidence, I had my research team visit two supermarkets in New York city last night… Gristedes and Whole Foods (WFMI)… okay, maybe not the broad spectrum representation of where the American consumer is shopping… but it tells us something about where the affluent consumer shops… and therefore where the rest might be eventually heading.

In Gristedes, Cadbury products occupy just 2 pathetic feet of shelf space… and all of this stuff that is bad for you… the snacks and candy… okay, well maybe Hall’s is not bad for you… now you know something, I was thinking… if this was World War I, this would be like Luxembourg…

How about Hain?… it had 52 feet of shelf space… with products ranging from west soy and soy dream, to earths best celestial tea, and bread shop… that makes Hain a great power… maybe France, maybe Germany… when it comes to the supermarket wars at least… the results at Whole Foods were even more telling… Whole Foods represents the vanguard of all that is healthy… it is organic food nonsense that is making people money.. it is a high growth grocery store… and others are trying to imitate it, at least in terms of the products they carry.

So, how did the fight for aisle space look at Whole Foods… we went to the Whole Foods in Union Square… get this, Cadbury did not have any shelf space at all… now, while Whole Foods carries natural and organic foods, and would therefore not be a Cadbury customer… the fact that such a well performing chain like Whole Foods would leave Cadbury off the radar screen… I find it telling… Hain on the other hand seemed to absolutely dominate the shelves of the store of the future… which is even better than the chef of the future… here is the stats… 17 feet of Celestial tea… 35 feet of Rice Dream and West Soy… that is unbelievable… 45 feet for Earth’s Best… in total Hain had 220 feet of shelf space… at one of the most packed supermarkets in New York city… and we know from the companies conference call that it sells about 40% of Whole Foods snack foods… a pretty fabulous position… have you had these yet…. Stripes and Blues… I got a couple of them off of Long Island the other day.

Cadbury seems like the horses cavalry… Hain is mechanized … obviously there is nothing scientific about this method what so ever… it is not representative even of all of New York city… let alone the tri-state area… but it does help us to understand that buying Cadbury… here is the shelf space Cadbury… Kraft is doing… it has got outdated thinking… it is buying candy that rots your teeth… makes you fat… and though it may be a wife’s tale, gives you pimples.

If it bought Hain… it would be buying itself a huge chunk of business at places like the future Whole Foods… high end organic places that are growing much faster than the average supermarket… this is the future… Kraft is wrong… Mad Money is right… so suppose Kraft’s management watches the show and decides to take my advice… what they would… or maybe another acquirer be willing to pay for Hain… if we just used the same multiple that Kraft is paying for the one without shelf space… Cadbury… if we slapped the same 11.6 times earnings before interest, taxes, depreciation, and amortization that Cadbury is getting on Hain… the acquisition would cost $1.3b.. do you know that is a 38% premium to Hain’s current enterprise value… $17 stock worth $26 to an acquirer… better than a sharp rice stream in the eye… that would still be so much smaller than Cadbury that Kraft could buy both… I would certainly buy Hain's first… boy this stuff is so good I had it in my coffee the other day, you could not tell the difference between this and battery acid.

I am not the only one who thinks this is a good idea… just check out yesterday’s New York Times… “Despite Their Prices, Gourmet Teas Thrive as Global Economy Sags”… which of course I would have wrote differently… I would have said expensive gourmet teas by Hain but that is just because the Times does not write for your audience… now there is more to Hain celestial simply than an appealing take over target… now you know on Mad Money we never speculate on take over unless the fundamentals are strong… wow, the fundamentals at Hain are terrific… despite a tough environment in its fiscal fourth quarter which ended on June 30th… it did, it had a tough environment… reported on August 25th, Hain is holding up thanks to solid execution and a focus on its core brands… sales for the full fiscal year were up 7%.. okay 10.8% adjusted for currency.

Hain is focused on expanding the number of stores that it sales too… so therefore again we have got the great growth… it is selling more to current customers too… it is trying to get, you got it, more shelf space… it is aggressively pushing its tea business… we know that right… it has got new lines of tea… re-launching its green tea… while moving into so called wellness teas… Hain has also got a whole bunch of new products rolling out… I mentioned some of these… and these are already at 2500 Wal-Marts… and expansion of its glutton free products… you may not be involved, my sister has got that glutton problem… it is one of the fastest growing foods in the organic channel… given how many people have celiac disease and cannot process gluten… and Hain also has a new Martha Stewart brand in line of natural cleaning products launching this fall.. I think that this is going to be huge… I reiterate my buy on Martha Stewart Living Omnimedia (MSO).

The stock is trading at 14.3 times 2010 earnings… 15% long term growth rates… therefore the stock is underneath the growth rate… the growth rate is underneath the P/E, that is perfect… the big food companies have roughly similar multiples but with half the growth… half, which means that I think Hain can eventually double on its own… even without a takeover bid.

Here is the bottom line…

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Jim's comments AFTER the interview:     The Hain Celestial Group, Inc. (HAIN) is winning its war for aisle space in the supermarket… its organic and natural products are the future of food… not Cadbury’s potentially fattening, cavity creating candies… Kraft, a company badly in need of Mad Money’s health… should be trying to buy Hain instead… and if they don’t, I would not be surprised if somebody else took a shot at it… that is why I think that Hain is a buy, buy, buy.

[verbatim recap]

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