Benzinga | Dec 15, 2020 07:04AM EST

Exclusive: GrowGeneration Acquires Grassroots Hydroponics Following $172.5M Raise

Specialty hydroponic and organic garden centers chain GrowGeneration Corp. (NASDAQ:GRWG) is acquiring Grassroots Hydroponics, Benzinga has learned.

The news comes on the heels of the closing of GrowGeneration's closing a $172.5 million raise to fuel expansion.

Why It Mattes

Grassroots Hydroponics is one of the largest hydroponic operations in Southern California where it owns and operates three hydroponic garden centers generating annual sales of almost $20 million.

This deal brings GrowGeneration's nationwide store count to 39, with 13 of them being in the booming California market.

The new stores are located in in Southern California. Only last month, GrowGen had acquired four stores in Northern California, via the purchase of The Grow Biz, underscoring the company's high interest in this particular market.

"The acquisition of Grassroots Hydroponics gives GrowGeneration an important foothold in the Southern California cannabis market. We plan to leverage Grassroots' relationships and grow expertise as we build out a larger footprint in the critical Southern California region," Tony Sullivan, chief operating officer of GrowGen, told Benzinga.

What's Next

GrowGen has emerged as the best-performing cannabis stock of 2020, advancing more than 700% this year.

Starting out in 2008 with a single hydroponics store in Pueblo, Colorado, GrowGeneration has become one of the nation's largest hydroponics chains. It has built out multi-million dollar indoor grows for America's leading MSOs, including Trulieve Cannabis Corp. (OTCQX:TCNNF), Green Thumb Industries Inc (OTCQX:GTBIF), Curaleaf Holdings Inc. (OTCQX:CURLF), Acreage Holdings Inc. (OTCQX:ACRHF), Cresco Labs Inc. (OTCQX:CRLBF) and others.

Last quarter, GrowGen increased its 2020 revenue guidance to $185 million-$190 million, and adjusted EBITDA to $19 million -- $20 million. It also updated revenue and adjusted EBITDA guidance for 2021 to $280 million-$300 million, and $34 million -- $36 million, respectively. That's up 1,000% from the $30 million the company hit in 2018.