NEW YORK, Feb. 10, 2021 (GLOBE NEWSWIRE) -- 1847 Holdings LLC ( EFSH) (the Company or 1847 Holdings), a publicly traded, diversified acquisition holding company that leverages its management expertise to acquire lower-middle market businesses at attractive valuations in industries with unique characteristics and defensible market positions, today announced that its wholly-owned subsidiary, 1847 Hydroponic Inc., has entered into a securities purchase agreement relating to the acquisition of multiple entities that operate retail hydroponic and garden supply stores (Hydroponic Business) for a purchase price of $100 million consisting of $90 million in cash and $10 million in the form of a three-year buyer note. The acquisition is subject to customary closing conditions, including a financing contingency. The acquisition is expected to close during the second quarter of 2021.
The Hydroponic Business operates two of the largest hydroponic and garden supply stores in California and Oregon, selling a wide range of products. They are considered the go-to-place for large and small growers in both states. The Hydroponic Business is currently owned and operated by two cousins with extensive industry experience, who will continue in advisory roles following the acquisition. The Hydroponic Business generated $25.3 million and $18.6 million in revenue during the fiscal years ended December 31, 2019 and 2018, respectively, and net income of $3.9 million and $1.7 million, in such years, respectively. During the trailing twelve-month period ended November 30, 2020, the Hydroponic Business generated revenue of $42.8 million (unaudited) and net income of $8.2 million (unaudited).
Ellery W. Roberts, the Chairman and CEO of 1847 Holdings stated, Consistent with our business model of acquiring lower middle market companies at attractive valuations, our subsidiary signed an agreement to acquire the Hydroponic Business at a multiple of approximately 2.33x trailing twelve-month revenue whereas comparable public companies like GrowGeneration Corp. and Hydrofarm Holdings Group, Inc. trade in excess of 8x their revenue. As a result, we believe that this acquisition in the fast-growing hydroponic equipment market will create significant value for our shareholders.
The hydroponic equipment store market is estimated at $914 million and grew at a 3.7% annual basis from 2014 through 2019, according to IBISWorld.
About 1847 Holdings LLC
1847 Holdings LLC ( EFSH), a publicly traded diversified acquisition holding company, was founded by Ellery W. Roberts, a former partner of Parallel Investment Partners, Saunders Karp & Megrue and Principal of Lazard Freres Strategic Realty Investors. 1847 Holdings investment thesis is that capital market inefficiencies have left the founders and/or stakeholders of many small business enterprises or lower-middle market businesses with limited exit options despite the intrinsic value of their business. Given this dynamic, 1847 Holdings can consistently acquire businesses it views as solid for reasonable multiples of cash flow and then deploys resources to strengthen the infrastructure and systems to improve operations. These improvements may lead to a sale or IPO of an operating subsidiary at higher valuations than the purchase price and/or alternatively, an operating subsidiary may be held in perpetuity and contribute to 1847 Holdings ability to pay regular and special dividends to shareholders.
This press release may contain information about 1847 Holdings' view of its future expectations, plans and prospects that constitute forward-looking statements. All forward-looking statements are based on our management's beliefs, assumptions, and expectations of our future economic performance, considering the information currently available to it. These statements are not statements of historical fact. Forward-looking statements are subject to a number of factors, risks and uncertainties, some of which are not currently known to us, that may cause our actual results, performance or financial condition to be materially different from the expectations of future results, performance or financial position. Our actual results may differ materially from the results discussed in forward-looking statements. Factors that might cause such a difference include but are not limited to the risks set forth in "Risk Factors" included in our SEC filings.
These forward-looking statements in this press release include, but are not limited to, statements regarding the expected timing for completion of the transaction; statements related to the expected benefits of the proposed transaction, including but not limited to, the expected growth of the business and benefits to 1847 Holdings shareholders. You should not rely on these forward-looking statements as they involve risks and uncertainties that may cause actual results to vary materially from the forward-looking statements. Factors that might contribute to such differences include, among others, the possibility that the closing conditions to the proposed transaction may not be satisfied or waived, including any required consents and the need to obtain financing for the transaction; the retention of Hydroponic Business employees and 1847 Holdings ability to successfully integrate the Hydroponic Business business; risks inherent in the achievement of anticipated synergies and the timing thereof; the effects of the highly competitive market in which the hydroponic business operates; our ability to achieve our objectives and our strategic and operational initiatives; and other general market, political, economic, and business conditions.
Dave Gentry, CEO
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