Benzinga | Aug 4, 2021 07:37AM EDT

Hydrofarm Acquires Nutrient Company Greenstar Plant Products For $83M

* Hydrofarm Holdings Group Inc (NASDAQ:HYFM) closed on the acquisition of Canadian nutrient company Greenstar Plant Products, Inc., manufacturer of the Grotek and Gaia Green brands, for a purchase price of $83 million.

* Greenstar will become a wholly-owned indirect subsidiary of Hydrofarm Holdings.

* These brands join Hydrofarm's lineup of proprietary branded products in the lighting, climate control, nutrients, and growing media categories.

* Hydrofarm has historically distributed Greenstar's Grotek and Gaia brands, representing ~50% of Greenstar's total net sales.

* Hydrofarm expects Greenstar to generate approximately $26 million in net sales in 2021, representing significant growth from the prior year and expects the acquisition to enhance adjusted EBITDA margin for FY21.

* The transaction represents an acquisition multiple of approximately 8x Greenstar's estimated 2021 Adjusted EBITDA.

* The acquisition continues Hydrofarm's strategic efforts to acquire manufacturers of branded products in key CEA product categories, including Aurora and nutrient brands HEAVY 16, House & Garden, and Mad Farmer.

* Hydrofarm funded the deal through a combination of cash and an existing credit facility. It held cash and cash equivalent of $62 million as of March 31, 2021.

* Price action: HYFM closed lower by 0.85% at $49.02 on Tuesday.