MARYSVILLE, Ohio – The Scotts Co. announced today it will acquire Smith & Hawken, one of the nation’s leading brands in the fast growing garden lifestyle category.
“The Smith & Hawken brand is the gold standard in outdoor living and is an outstanding fit with our strategy to extend our reach into adjacent lawn and garden categories and to own industry-leading brands in every category in which we compete,” said Jim Hagedorn, chairman and chief executive officer of Scotts. “Avid gardeners know and trust the Smith & Hawken brand just as they do Scotts®, Miracle-Gro®, Ortho® and Roundup®. The power and flexibility of the Smith & Hawken brand are the driving forces in pursuing this opportunity.
“This acquisition is a natural step for Scotts,” Hagedorn continued. “Gardening today is about much more than tending to your flowers and maintaining a beautiful lawn – it’s about a lifestyle. Our consumers are incorporating gardening themes into their everyday lives, both indoors and outdoors. The Smith & Hawken brand will further strengthen our relationship with consumers and create exciting and new opportunities for growth.”
Smith & Hawken products are sold through its 56 retail stores around the United States as well as through catalog and Internet sales. The company has also extended its brand into other retail channels with its successful “store-within-a-store” concept in garden centers across the country. “Growth through additional channels of distribution will be key to our strategy as we look to bring this premium brand to even more consumers in more places,” Hagedorn said.
The garden lifestyle industry has combined revenue of about $21 billion, according to the National Gardening Association. Overall, the industry is growing at least as fast as the lawn and garden consumables industry, which has a five-year annualized growth rate of 6 percent. Smith & Hawken participates in several categories, including garden tools, gardening containers, pottery, live goods and high-end outdoor furniture. Several of those categories have growth rates in the high-single digits.
“We’re excited to join an organization that shares our passion for gardening and high quality products,” said Barry Gilbert, chief executive officer of Smith & Hawken. “Our team has done an excellent job building the Smith & Hawken brand, but we have only scratched the surface. We look forward to working within the Scotts family and doing everything we can to enable our brand to reach its full potential.”
Scotts will pay approximately $72 million for Smith & Hawken, including the assumption of $14 million of existing debt. It will fund the transaction, which is scheduled to close Oct. 1, with its existing credit facility. Smith & Hawken is projected to report 2004 revenue of about $145 million, and the transaction is expected to be slightly dilutive in fiscal 2005. Banc of America Securities LLC will serve as financial advisor to The Scotts Co. in connection with the transaction.
Smith & Hawken, which is privately owned by funds managed by investment boutique DDJ Capital Management, employs about 850 people and will continue to be based in Novato, Calif., near San Francisco. It was founded as a high-quality garden tool company in 1979 by Dave Smith and Paul Hawken and has successfully grown by extending its product line and focusing on serving consumers of high-end gardening lifestyle products.
Upon completion of the deal, Gilbert, who has led the company since 2001 and was previously vice chairman and chief operating officer of The Sharper Image, will continue to lead the Smith & Hawken business. The rest of the Smith & Hawken management team also will be retained.
“Barry and his team have done an outstanding job building a successful organization and have created an entrepreneurial culture that is very much like that of Scotts,” Hagedorn said. “We look forward to working with them and our existing retail partners, and believe that, together, we can leverage the power of the Smith & Hawken brand even further, creating new growth opportunities for the lawn and garden industry.”
