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Central Garden's (CENT) Green Garden Buyout to Boost Portfolio

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Central Garden & Pet Company CENT is committed toward strengthening its position via prudent buyouts in the garden and pet segments. Treading the same path, the company unveiled that it has agreed to buy Green Garden Products (“Green Garden”) for $532 million. Headquartered in Norton, MA, Green Garden is a key provider of vegetables, seed starters, herb and flower seed packets, and plant nutrients across North America. The deal, which is subject to customary closing conditions and regulatory approval, will conclude in second-quarter fiscal 2021.

Green Garden boasts robust brands such as Ferry-Morse Home Gardening, Jiffy Seed Starting, SUPERthrive Plant Nutrients, Livingston Seeds, Jiffy Hydro Hydroponics, McKenzie Seed, American Seed, and NK Lawn and Garden. Markedly, addition of such reputed brands is expected to expand the Central Garden & Pet’s portfolio into a strong adjacent category, and thus reinforce its relationship with important retailers.

Central Garden & Pet will acquire Green Garden from the private equity firm Freeman Spogli & Co, and other shareholders. Green Garden, which was earlier known as Plantation Products, ships more than 250 million seed packets on a yearly basis. Established in 1980, Green Garden presently employs over 180 full-time employees and has production and distribution facilities in Ohio, California and Manitoba, Canada. It distributes above 3,500 product SKUs to a network of nearly 70,000 retail locations across the home center, mass merchant, farm and independent, dollar store, and distributor/co-op channels.

Last month, Central Garden & Pet Company unveiled plans to buy Hopewell Nursery, which is a key live goods grower that caters to retail nurseries, landscape contractors, wholesalers and garden centers in the Northeast. This deal, which follows the addition of Bell Nursery to the company’s portfolio in 2018, will strengthen the company’s position in the live goods space with high-quality offerings.

Acquisitions form an important part of Central Garden & Pet’s strategy. It has expanded the business via more than 50 acquisitions since 1992. Through these buyouts, Central Garden also looks to enhance its manufacturing capabilities, operating synergies, distribution network, economies of scale and market advantages.

Over the past three years, the company has bought four businesses, and ventured into live plant and outdoor seat cushion businesses. Central Garden acquired C&S Products in May 2019, which has been complementing its existing wild bird feed business. This buyout has been boosting the company’s top line. Prior to this, it acquired the remaining 55% stake in Arden Companies in February 2019. The company bought Bell Nursery, a leading grower and distributor of live flowers and plants, in March 2018. It also acquired General Pet Supply, a supplier of pet food and supplies.


 

Clearly, the company has been strengthening its position in the pet supplies, and lawn and garden supplies space. Moreover, it has been developing new products, advancing digital capabilities, optimizing supply chain and focusing on marketing activities. Impressively, these endeavors aided the company in delivering a stellar performance in fourth-quarter fiscal 2020. The Zacks Rank #3 (Hold) firm’s shares have increased 24.1% over the past year, outperforming the industry’s 14.4% gain.

Solid Consumer Discretionary Bets

Reynolds Consumer Products REYN has a trailing four-quarter earnings average of 5.7% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Party City Holdco PRTY, also a Zacks Rank #2 stock, delivered an earnings surprise of 121.7% in the last-reported quarter.

Spectrum Brands SPB has an expected long-term earnings growth rate of 18.3% and currently holds a Zacks Rank #2.

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Central Garden & Pet Company (CENT) : Free Stock Analysis Report
 
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Party City Holdco Inc. (PRTY) : Free Stock Analysis Report
 
Reynolds Consumer Products Inc. (REYN) : Free Stock Analysis Report
 
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