Scotts Miracle-Gro subsidiary buys Santa Rosa-based General Hydroponics
A subsidiary of fertilizer giant Scotts Miracle-Gro announced a deal Thursday to acquire General Hydroponics, a homegrown Sonoma County company that has become a major international supplier of liquid nutrients used to grow food, flowers and indoor marijuana.
Hawthorne Gardening Co., which was created by Scotts last fall to focus on indoor and urban gardening products, said it was buying Santa Rosa-based General Hydroponics and its sister company in Marysville, Bio-Organic Solutions, which sells organic soils and other gardening supplies under the Vermicrop brand.
Financial terms were not disclosed.
Plant scientist Larry Brooke, a proponent of medical marijuana, founded General Hydroponics more than 35 years ago in Sebastopol and grew it into a company with worldwide distribution and manufacturing plants in Santa Rosa, West Virginia and France. His son-in-law, Ross Haley, has run General Hydroponics and Bio-Organic Solutions since 2011.
“I wasn’t looking to make the company to sell it,” Brooke said Thursday afternoon from Florida, where the two men were vacationing with their families. “I was making a company to serve the world and my need to be part of something that was fun.”
While he acknowledged the medical marijuana industry uses his company’s products, he said it has never been the company’s focus. Rather, he said his lifelong goal has been to perfect ways to grow food more efficiently on a planet whose resources are strained by an exploding population.
“However large a cannabis market may be, a fruit market is exponentially larger,” Brooke said.
It’s possible the trend toward legalization of marijuana could actually reduce the demand for the company’s products as growers move outdoors, Brooke said.
Hawthorne didn’t see value in any one particular hydroponic crop, but rather in the trend of more people looking to grow their own food, particularly in space-constrained urban environments, spokeswoman Kimberly Chisholm said.
“We are not uniformly looking at one industry and saying we’re making a bet on it,” Chisholm said.
Nevertheless, the acquisition could be seen as a Wall Street-backed fertilizer firm looking to stake out a position in the growing hydroponics market and capitalize on the anticipated surge in marijuana cultivation as states legalize pot. Voters in four states - Colorado, Washington, Oregon and Alaska - and the District of Columbia have legalized the recreational use of marijuana, and California and other states are poised to follow suit.
With more than $2.8 billion in worldwide sales, the Scotts Miracle-Gro Co. is the world’s largest marketer of branded consumer products for lawn and garden care. It markets a range of products, including Roundup weed killer and Ortho insecticides.
Scotts Miracle-Gro formed the Hawthorne Gardening Co. in October 2014. It is managed by Chris Hagedorn, the oldest son of Scotts CEO Jim Hagedorn.
“The trend of urban and indoor gardening is accelerating by the day, and we’re excited to quickly be emerging as the company that is meeting the unique needs of these consumers,” Hagedorn said in a statement. “The addition of General Hydroponics and Vermicrop to our family of brands is an important step in our history and speaks to our commitment in this space. Our access to capital and technology will allow us to take these outstanding businesses to an even higher level.”
Haley will continue to oversee both brands and will remain based in California. All manufacturing operations will remain in place.
Word of the sale has been circulating for several weeks, said Chad Russell, owner of Santa Rosa’s Hydroponics Warehouse. General Hydroponics products are strong sellers because they are effective and local, he said.
Russell said he doesn’t ask what kinds of crops people are growing with General Hydroponics products with names like BioThrive, BioBud and BioWeed, but he doesn’t doubt many of his customers are growing marijuana.
“Everyone knows what’s going on and are silent about it,” Russell said.
The company’s rapid growth in recent years has mirrored the boom in the medical marijuana industry. But Brooke stressed that he has taken pains not to cater to any particular crop.
“For the many years I’ve run GH, I’ve been very careful that I didn’t cross any lines about allowing the identity of my company to be associated with medical cannabis,” he said.
The company operates a testing and research facility north of Sebastopol, a former apple processing plant bigger than four football fields and surrounded by small farms and vineyards.
In 2010, Brooke bought a 166,200-square-foot warehouse off Corporate Center Parkway in west Santa Rosa that was built in 2001 by JDS Uniphase. It now serves as the company’s headquarters and its primary manufacturing location. In 2012, Brooke purchased a private six-seater jet and spoke of plans to expand the business.
He declined to disclose the sale price, company revenues or even the number of employees who work at the company, but suggested the purchase was a significant one.
“We’re both the leaders in our fields. We grew a nice company,” Brooke said. “The money is not what swayed me. It’s the raw muscle of their capacity to manufacture and distribute.”
Chisholm also declined to discuss terms, but said the publicly held company would follow any rules about disclosures in the future. Scotts Miracle-Gro, whose stock trades on the New York Stock Exchange, must disclose details of the purchase to shareholders if it is deemed a materially significant event.
You can reach Staff Writer Kevin McCallum at 521-5207 or email@example.com. On Twitter @SRCityBeat.