Last June, Scotts Miracle-Gro announced they had made a deal to acquire a 75 percent stake in Dutch hydroponics company Gavita Holland BV, but just yesterday disclosed the deal was worth $136 million, Columbus Business First reported.
Following the announcement, JP Morgan upgraded Scotts stock from Overweight to Neutral, raising its target price from $70 to $85. The company’s stock hit an all-time high of $80.14 after the upgrade.
Jeffery Zekauskas, a JP Morgan analyst, contributed the move, in part, to the role of hydroponics in cannabis cultivation.
“The hydroponics market taps into marijuana demand and the company now has a growth option that we think an investor is able to capture for about the price of the traditional business,” he said in a Barrons blog post.
Last year Scotts spent nearly $130 million to purchase California-based General Hydroponics in the largest deal in the company’s history. Earlier this week Scotts subsidiary Hawthorne Gardening Co. signed an agreement to purchase Arizona-based Botanicare, a plant nutrient manufacturer, who offers hydroponic growing systems.
Scotts CEO Jim Hagedorn said his company is now becoming the market leader in a once fractured market. Scotts expects Hawthorne, run by Hagedorn’s son Chris, to reach $250 million in annual sales after their acquisitions close.
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