The Scotts Miracle-Gro Co., Marysville, Ohio, said on Jan. 4 it has acquired Luxx Lighting, Los Angeles, and True Liberty Bags, Sonoma County, Calif., in order to strengthen The Hawthorne Gardening Co. business segment.
“These strategic acquisitions reinforce our commitment to provide commercial cannabis cultivators in state-authorized markets with a complete set of solutions driven by insight and innovation,” said Chris Hagedorn, Hawthorne President.
“While the cannabis market continues to see near-term challenges from an over-production in recent months, we see the current reality as an opportunity to further distance ourselves from the competition and strengthen our business for long-term success,” he continued.
“The True Liberty transaction gives us our first offering in this niche market, however, the acquisition of Luxx bolsters a lighting portfolio that is now several times larger and more diverse than our nearest competitor,” he said. “Luxx has deep roots in the cannabis industry with lights that were designed, tested, and refined in collaboration with the team at Jungle Boys, a company run by a group of some of the best cannabis cultivators in the world. We look forward to an ongoing relationship with Jungle Boys to support the sales and marketing efforts of the Luxx brand.”
Luxx joins a product lineup that also includes the Gavita and Sun System brands, and Scotts said this provides the opportunity for significant cost synergies and process improvements across the portfolio.
Scotts acquired the Luxx assets for $215 million. Hawthorne, which previously did not distribute Luxx, will expand the marketing and distribution of the brand in emerging markets, including the East Coast. The acquisition, which closed Dec. 30, 2021, adds approximately $100 million in sales and $20 million in operating income to Hawthorne on an annualized basis.
While approximately $75 million of revenue from Luxx is expected in the remainder of fiscal 2022, the transaction is expected to be neutral to earnings for the year due to the impact of purchase accounting and one-time deal costs.
True Liberty, which was acquired for $10 million, introduced storage solutions directly to the hydroponic market, developing a full offering of liners and storage solutions to dry and cure plant products. Hawthorne has been the primary U.S. provider of True Liberty brands, which expands Hawthorne’s harvest portfolio.
These deals follow the August 2021 acquisitions of HydroLogic Purification Systems (GM Aug. 6, 2021), which moved Hawthorne into the water reclamation and purification category, and Rhizoflora (GM Aug. 20, 2021), whose Terpinator and Purpinator brands expanded Hawthorne’s nutrient offering.