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Scotts Miracle-Gro spends $136M on Dutch hydroponics business

Scotts Miracle-Gro Co. spent $136 million to buy a Dutch maker of hydroponics gardening lights.

It’s another big purchase in the industry with close ties to marijuana. Hydroponics, or growing without soil, also is a method to grow plants and vegetables.

The Marysville-based lawn and garden company has targeted pot and grow-your-own plants and vegetables as a major growth opportunity.

CEO Jim Hagedorn acknowledged the queasiness some in the hydroponics business might have about a large corporation becoming a market leader in the once-fractured market.

“Since we’re an outsider I know a lot of people will be watching to see how we behave,” he told analysts Wednesday. “This is a core business for us.”

Scotts subsidiary Hawthorne Gardening Co. spent the money to acquire a 75 percent stake in Gavita Holland BV, which has $100 million in annual sales. Gavita made the deal public in June, but Scotts disclosed the purchase price Wednesday.

Gavita said its management will remain in place and retain 25 percent ownership.

The purchase comes a year after Scotts (NYSE:SMG) spent about $130 million on California-based General Hydroponics Inc., which was the company’s biggest acquisition since a European expansion push in the 1990s.

Hawthorne, a recently created subsidiary based out of New York and run by Hagedorn’s son, Chris, this week signed a definitive agreement to purchase Botanicare, an Arizona-based manufacturer of plant nutrients and growing systems for hydroponic gardening. The purchase price has not yet been disclosed.

Scotts said Hawthorne soon will become its own reporting segment, separating it from Scotts’ three reporting segments of U.S. consumer, Europe consumer and other.

The $3.02 billion company expects annual sales for Hawthorne to reach $250 million after the acquisitions close. In November Scotts’ CFO expected Hawthorne to notch $100 million in annual sales for the fiscal year ending September.

Once the Botanicare deal closes the company will move away from significant mergers and acquisition activity, Hagedorn said.