BOULDER — The Scotts Miracle-Gro Co., which bought a 31 percent stake in Boulder-based AeroGrow International Inc. in 2013, has increased its stake in the local firm to 80 percent.
AeroGrow this week announced that Scotts had exercised warrants to purchase the additional shares for $47.8 million in cash. The exercise price was established by a formula negotiated during Scotts’ original deal to buy a minority stake in AeroGrow.
Just prior to the exercise, Scotts had owned about 45 percent of AeroGrow’s issued and outstanding voting and capital stock, including about 2.6 million shares of Series B preferred stock. Scotts’ new increased stake came through the issuance of 21.6 million new shares of common stock and the conversion of the Series B preferred stock to common stock.
AeroGrow officials did not respond to an interview request Thursday. But a company news release noted that $41 million-worth of the proceeds would be distributed to AeroGrow stockholders at a rate of $1.21 per share. The other $6.8 million will be used to pay off a working capital loan from Scotts and provide new capital to fund operations and growth.
AeroGrow makes indoor gardens for growing any number of herbs and vegetables year-round. Ohio-based Scotts, meanwhile, is a giant in the lawn and garden space.
As part of the warrant exercise, Michael Wolfe and Michael Barish have resigned their seats on the AeroGrow board. Wolfe, however, will remain as president and CEO of the company. Chris Hagedorn — general manager of Scotts subsidiary The Hawthorne Gardening Co., which is focused on indoor and urban gardening — takes over as chairman of the AeroGrow board.
AeroGrow stock is traded over the counter under the ticker symbol AERO. The company is based at 6075 Longbow Drive.