Cannabis hydroponics company makes landmark US acquisition
Written on the 17 May 2018 by Ryan Bedford
Australian cannabis hydroponics company RotoGro (ASX:RGI) has agreed to acquire US-based Hanson Fertigation for $1.75 million, in an effort to capitalise on the lucrative overseas market.
The transaction is equivalent to three times Hanson Fertigation's 2017 financial year earnings before interest, tax, depreciation and amortization (EBITDA).
Hanson Fertigation operates out of Las Vegas in Nevada, USA. The company was founded in 1957 in the business of water treatment and fertigation services, focusing primarily on the State of Nevada.
It will be paid via five million fully-paid ordinary shares in RotoGro, along with performance shares that will convert to ordinary shares.
RotoGro plans to expand its medicinal and recreational cannabis markets by exploring strategic partnership and synergistic opportunities.
RotoGro's managing director Michael Carli says the acquisition is vital in strengthening the company.
"The (acquisition) is a key milestone in building the full suite of capabilities to provide our customers with a turnkey solution," says Carli.
The acquisition will also boost revenue growth with "secured orders to date in excess of USD$1M for 2018."
Carli says providing solutions to all forms of agriculture "expands capabilities on an enterprise level".
Hanson Fertigation's president Stephen C. Everett is excited about the acquisition, saying it will speed up the company's growth and extend their global reach significantly.
"The acquisition (by RotoGro) will accelerate the global expansion of our patent-pending fully-automated nutrient delivery system," says Everett.
"With more than 30 years of market-proven experience, we have been able to drive risk reduction and economies of scale, integrating technology and science to the art of growing."
The acquisition comes just over a month after RotoGro secured an order from a Canadian cannabis producer in April.
Author: Ryan Bedford