Hydrofarm to Pay $125 Million for 2nd Nutrient Company Acquisition in 2021

Hydrofarm Enters into Agreement to Acquire House & Garden

Manufacturer and Supplier of Hydroponic Nutrients and Equipment to Expand Hydrofarm’s Product Line and Market Position as Company Accelerates Strategic Acquisition Strategy

FAIRLESS HILLS, Pa., May 24, 2021 (GLOBE NEWSWIRE) — 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 House & Garden, Inc., Humboldt Wholesale, Inc., Allied Imports & Logistics, Inc., and South Coast Horticultural Supply, Inc. (collectively “House & Garden”) a Humboldt County, Calif.-based producer of quality nutrients under the House & Garden and Mad Farmer brands. The announcement follows Hydrofarm’s recent acquisition of nutrient manufacturer HEAVY 16 as the company accelerates its acquisition strategy.

Hydrofarm will fund the purchase price of approximately $125 million using its existing cash resources and under the terms of the transaction agreement, House & Garden will become a wholly owned indirect subsidiary of Hydrofarm Holdings Group, Inc. Subject to customary closing conditions, the transaction is expected to be completed over the next 40 days.

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.

Bill Toler, Chairman and Chief Executive Officer of Hydrofarm.

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.

“We admire Hydrofarm’s deep roots as a leader in the hydroponics industry,” said Steven Muller, founder of House & Garden. “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.”

The acquisition continues Hydrofarm’s strategic efforts to acquire manufacturers of branded products in key CEA product categories. The strategic combination of Hydrofarm’s leading distribution platform with the House & Garden and Mad Farmer brands is expected to drive further growth across the combined company’s global customer base. Hydrofarm expects House & Garden to generate approximately $55 million in net sales across the full calendar year 2021, representing significant growth from the prior year. House & Garden’s profit margin profile will be accretive to Hydrofarm and as a result, the Company expects the acquisition will enhance the Company’s adjusted EBITDA margin for the 2021 fiscal year. The transaction represents an acquisition multiple of less than 7x House & Garden’s estimated 2021 Adjusted EBITDA, excluding synergies.

The House & Garden brand line-up, including its popular Root Excelurator additives, and the Mad Farmer brand, will become the second and third “house” brands added via acquisition to Hydrofarm’s product portfolio this year. Hydrofarm intends to continue expanding its line-up of proprietary branded products in the lighting, climate control, nutrients and growing media categories via acquisition and in-house innovation.

Rothschild & Co. is serving as financial advisor and Cozen O’Connor is serving as legal advisor to Hydrofarm. Deloitte Corporate Finance LLC is serving as financial advisor and Dentons LLP is serving as legal advisor to House & Garden.

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 House & Garden

Humboldt County’s House & Garden is located in Arcata, Calif., and produces and distributes premium-grade plant nutrients and fertilizers across the globe. Whether you garden as a hobby, or grow food and/or flowers for the masses, House & Garden’s line of high quality plant nutrients and additives can aid in increasing your crop’s yield and overall quality. Visit https://house-garden.us for more information.

Original press release

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