Hydrofarm Holdings Group, Inc. (“Hydrofarm”) (Nasdaq: HYFM), a
leading independent distributor and manufacturer of hydroponics
equipment and supplies for controlled environment agriculture
(“CEA”), announced it has entered into an agreement to acquire
Aurora Innovations, Inc., Aurora International, Inc., and Gotham
Properties LLC, (“Aurora”), a Eugene, Oregon-based manufacturer and
supplier of organic hydroponic products. Aurora’s Roots Organics
and Soul soil, grow media and nutrients brands, as well as its
Procision perlite and peat moss professional mixes will be added to
Hydrofarm’s lineup of high performance, proprietary branded
products.
Hydrofarm will fund the closing transaction
consideration of $161 million using a combination of cash and
approximately $26 million in newly issued HYFM common stock. The
referenced transaction consideration excludes a potential earn out
payment estimated at approximately $21 million based on achievement
of certain performance metrics. Under the terms of the transaction
agreement, Aurora will become a wholly-owned indirect subsidiary of
Hydrofarm Holdings Group, Inc. Subject to customary closing
conditions, the transaction is expected to be completed in July
2021.
Founded in 2000, Aurora is a family-owned
business with a strong vertically integrated manufacturing base
with three locations across North America. The company is dedicated
to ethical and sustainable practices and offers comprehensive plant
fertility product lines free from harmful chemical residues and
pesticides. Aurora will add to Hydrofarm’s growing proprietary
brand nutrient and grow media line-ups, including its first organic
nutrient and premium soil brands. Hydrofarm will also gain new
domestic manufacturing and distribution capabilities on the east
and west coasts along with a peat moss harvesting operation in
Canada.
“We are pleased to welcome Aurora into our
portfolio of quality brands, as our momentum continues to build on
the acquisitions front. Aurora has blazed trails for earth-friendly
growers, and their Roots Organics line is very popular – a standout
for its focus on microbe stimulants,” said Bill Toler, Chairman and
Chief Executive Officer of Hydrofarm. “Aurora’s pioneering R&D
lab work in plant nutrition over the past 10-plus years has led to
the development of innovative products that improve yields for
growers, while simultaneously advancing science in a meaningful
way.”
“The timing is right for us to now join forces
with Hydrofarm, a company we’ve long admired over the past 20 years
and a trusted and highly respected player in the hydroponics
industry,” said Bowe McGinnis, Vice President and co-founder of
Aurora. “We have the skilled staff, and the motivation for serious
research into plant nutrition and world class manufacturing
capacity to deliver premium plant nutrition and grow media
products. We look forward to streamlining our operations with
Hydrofarm’s strong distribution capabilities and helping to support
the continued growth of Hydrofarm which has long been recognized as
the choice for professional growers and controlled environment
agriculture.”
“Hydrofarm’s deep foothold on distribution in
the Canadian market also allows us to maintain our focus on making
deluxe organic products for sustainable farming,” said Austin
Weiner, Vice President and co-founder of Aurora. “With our in-house
sources for essential base ingredients like peat, perlite, and worm
castings, we have adopted a grassroots approach to product design
that has resonated with farmers over the years.” Peat, perlite, and
worm castings are integral ingredients of premium grow media
products that support high yielding plant growth. Aurora’s Canadian
peat business offers Hydrofarm access to a valuable resource for
growers.
The strategic combination satisfies Hydrofarm’s
stated goals of acquiring high-growth businesses with attractive
margin profiles that manufacture and/or own the proprietary branded
products they sell. Hydrofarm expects Aurora to generate
approximately $60 million in net sales across the full calendar
year 2021. The full transaction consideration, including the
estimated earnout payment, represents an acquisition value of
approximately 9x Aurora’s 2021 Adjusted EBITDA, excluding synergies
but including the net present value of estimated tax benefits
resulting from the transaction.
Rothschild & Co is serving as financial
advisor, and Perkins Coie is serving as legal advisor to Hydrofarm.
BVAL CPAs & Advisors is serving as financial advisor, and
Gleaves Swearingen is serving as legal advisor to Aurora.
The announcement follows Hydrofarm’s recent
acquisitions of hydroponic nutrient brands HEAVY 16, House &
Garden, and Mad Farmer.
About Hydrofarm Holdings Group,
Inc.Hydrofarm is a leading distributor and manufacturer of
controlled environment agriculture equipment and supplies,
including high-intensity grow lights, climate control solutions,
and growing media, as well as a broad portfolio of innovative and
proprietary branded products. For more than 40 years, Hydrofarm has
helped growers in the U.S. and Canadian markets make growing easier
and more productive. The Company’s mission is to empower
growers, farmers and cultivators with products that enable greater
quality, efficiency, consistency and speed in their grow
projects. For additional information, please visit:
www.hydrofarm.com
About Aurora Innovations, Inc. and
Aurora International, Inc.Aurora Innovations was founded
in 2000 in Eugene, Oregon by a group of conscientious, organic
gardeners. Aurora is dedicated to bringing you superior and unique
organic gardening products so you and our planet will be healthier
and happier. Visit https://www.aurorainnovations.com.
Cautionary Note Regarding
Forward-Looking StatementsStatements contained in this
press release, other than statements of historical fact, which
address activities, events and developments that the Company
expects or anticipates will or may occur in the future, including,
but not limited to, information regarding the future economic
performance and financial condition of the Company, the plans and
objectives of the Company’s management, and the Company’s
assumptions regarding such performance and plans are
“forward-looking statements” within the meaning of the U.S. federal
securities laws that are subject to risks and uncertainties. These
forward-looking statements generally can be identified as
statements that include phrases such as “guidance,” “outlook,”
“projected,” “believe,” “target,” “predict,” “estimate,”
“forecast,” “strategy,” “may,” “goal,” “expect,” “anticipate,”
“intend,” “plan,” “foresee,” “likely,” “will,” “should” or other
similar words or phrases. Actual results could differ materially
from the forward-looking information in this release due to a
variety of factors, including, but not limited to:
The ongoing COVID-19 pandemic could have a
material adverse effect on the Company’s business, results of
operation, financial condition and/or cash flows; Interruptions in
the Company's supply chain, whether due to COVID-19 or otherwise
could adversely impact expected sales growth and operations; The
highly competitive nature of the Company’s markets could adversely
affect its ability to maintain or grow revenues; Certain of the
Company’s products may be purchased for use in new or emerging
industries or segments, including the cannabis industry, and/or be
subject to varying, inconsistent, and rapidly changing laws,
regulations, administrative and enforcement approaches, and
consumer perceptions and, among other things, such laws,
regulations, approaches and perceptions may adversely impact the
market for the Company’s products; Compliance with environmental
and other public health regulations or changes in such regulations
or regulatory enforcement priorities could increase the Company’s
costs of doing business or limit the Company’s ability to market
all of its products; Damage to the Company’s reputation or the
reputation of its products or products it markets on behalf of
third parties could have an adverse effect on its business; If the
Company is unable to effectively execute its e-commerce business,
its reputation and operating results may be harmed; The Company’s
operations may be impaired if its information technology systems
fail to perform adequately or if it is the subject of a data breach
or cyber-attack; The Company may not be able to adequately protect
its intellectual property and other proprietary rights that are
material to the Company’s business; Acquisitions, other strategic
alliances and investments could result in operating and integration
difficulties, dilution and other harmful consequences that may
adversely impact the Company’s business and results of operations.
Additional detailed information concerning a number of the
important factors that could cause actual results to differ
materially from the forward-looking information contained in this
release is readily available in the Company’s annual, quarterly and
other reports. The Company disclaims any obligation to update
developments of these risk factors or to announce publicly any
revision to any of the forward-looking statements contained in this
release, or to make corrections to reflect future events or
developments.
Investor Relations:ICRFitzhugh Taylor
ir@hydrofarm.com
Media Contacts:The LAKPR
GroupHannah Arnold, 202-559-9171, harnold@lakpr.com Lynn Trono,
323-672-8226, ltrono@lakpr.com -or-HydrofarmLisa Gallagher,
513-505-2334, lgallagher@hydrofarm.com
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