GrowGeneration Acquires Peer San Diego Hydroponics & Organics

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Ever eager to grow its footprint, GrowGeneration (NASDAQ:GRWG) has made a fresh acquisition in California. The hydroponics retailer announced Tuesday that it is acquiring its peer San Diego Hydroponics & Organics, a four-store chain located in the eponymous Southern California county.

Neither the price nor the terms of the deal were disclosed. GrowGeneration did say that its new asset produces revenue “approaching” $10 million (presumably, that’s an annual figure).

“As the leading hydroponics supplier, San Diego Hydroponics & Organics strategically positions GrowGen to conveniently provide our services to commercial growers in the Southern California market,” the company quoted its CEO Darren Lampert as saying.

Marijuana plants growing under LED lights.

Image source: Getty Images.

California is one of the more well-established marijuana markets in the U.S., having legalized recreational consumption and sale in 2016. It is also the most populous state in the country by far.

With the San Diego Hydroponics deal, GrowGeneration now has 17 stores throughout California. That is nearly half of its new total of 50 across the U.S.

San Diego Hydroponics was founded in 2001, opening its first store in the well-heeled community of Pacific Beach. These days, its four locations comprise over 20,000 square feet of retail space. The company employs 20 people; they will become part of GrowGeneration’s over 500-strong workforce.

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GrowGeneration targets either established (California) or high-potential (Arizona) markets for acquisitions. Its asset buys are fueling revenue growth, which in 2020 leapt 140% higher on a year-over-year basis to $192 million. Existing stores are also delivering higher revenue; same-store sales rose 63% across the same stretch of time.

On Tuesday, however, GrowGeneration shares were down by 6.6% in mid-afternoon trading, a steeper fall than that of the S&P 500 index.

 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.



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