Hydrofarm To Acquire House & Garden For $125M As Part Of Its Expanding Acquisition Strategy

Hydroponics equipment manufacturer Hydrofarm Holdings Group, Inc. HYFM announced Monday it will buy a producer of quality nutrients, House & Garden, for around $125 million.

The news comes on the heels of Hydrofarms’ recent purchase of another nutrient producer – HEAVY 16, with both purchases being part of the company’s acquisition strategy.

What Happened

Under the agreement, Hydrofarm will acquire House & Garden, Inc., Humboldt Wholesale, Inc., Allied Imports & Logistics, Inc. and South Coast Horticultural Supply, Inc. – or collectively “House & Garden.”

The Humboldt County, California-based House & Garden is known for House & Garden and Mad Farmer brands.

After the transaction is finalized, which should happen in the coming 40 days, House & Garden will become a wholly-owned indirect subsidiary of Hydrofarm Holdings Group, Inc.

Why It Matters

With the addition of House & Garden and Mad Farmer brands, Hydropfarm’s key distribution platform is expected to reach a wider customer base.

Hydrofarm expects House & Garden to yield around $55 million in net sales in 2021. With that profit margin added to Hydrofarms' financial results, the adjusted EBITDA margin should notably improve for the 2021 fiscal year.

This latest acquisition serves to expand Hydrofarm’s product portfolio, already growing this year with the addition of the second and third “house brands" through which it will obtain House & Garden's famous Root Excelurator additives and the Mad Farmer brand.

What’s more, Hydrofarm plans to further advance its portfolio of proprietary branded products covering nutrients, climate control and lighting among other categories.

“House & Garden offers a strong product line of plant nutrients that will strengthen our position in the nutrient sector and complement our rapidly expanding portfolio of premium products for controlled environment agriculture,” said Bill Toler, Hydrofarm's chairman and CEO. “House & Garden’s expansive distribution network across nearly 40 states and 10 countries provides a tremendous opportunity for us to extend our global reach and market penetration.”

Steven Muller, founder of House & Garden, acknowledged Hydrofarm’s strong position in the hydroponics industry. “We share a vision for a greener, prosperous and sustainable future as we capitalize on this pivotal moment for indoor plant cultivation that’s been fueled by consumer behavior and shifting legislative tailwinds in markets across the country.”

Price Action

Hydrofarm’s shares were trading 5.04% higher at $56.43 per share at the time of writing.

Photo by Ryan Lange on Unsplash