Hydrofarm To Acquire House & Garden For $125M; Shares Rise 5% After-Market

Hydrofarm Holdings Group (HYFM) has agreed to acquire House & Garden for a consideration of $125 million.  Hydrofarm will fund the acquisition with cash at hand and expects the transaction to close in the next 40 days. Shares of the company rose about 5% in Monday’s extended trading session.

Hydrofarm manufactures and distributes hydroponics equipment and supplies for controlled environment agriculture (CEA). House & Garden produces nutrients under its House & Garden and Mad Farmer brands.

Hydrofarm Chairman and CEO Bill Toler said, “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.”

Toler added, “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.” (See Hydrofarm Holdings stock analysis on TipRanks)

This move is part of Hydrofarm’s strategy to add manufacturers of branded products in major CEA categories to its portfolio. The company hopes to drive growth by combining its distribution platform with these brands.

Recently, Truist Financial analyst William Chappell reiterated a Buy rating on the stock and increased the price target to $95 (76.8% upside potential) from $65.

Chappell foresees Hydrofarm benefitting immensely amid the increasing demand for cannabis and related products in the U.S. and compares the market dynamics to “selling pickaxes to the gold rush.”

Deutsche Bank’s Kevin Marek also has a Buy rating on the stock but lowered the price target to $77 (43.3% upside potential) from $88.

Consensus rating for Hydrofarm is a Moderate Buy alongside average analyst price target of $74.50 implying 38.7% upside potential.

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