The company yesterday reported a 3.2% drop in revenue from $1.24bn in Q2 of last year to $1.20bn in Q2 of this year, missing analyst predictions that sales would between $1.28 billion and $1.31 billion. Its share price fell by 5.87% yesterday. Shares recovered somewhat in after-hours trading, rising by £1.77%.
Scotts Miracle-Gro associates in Europe and Australia will become employees of Exponent Private Equity LLP under the deal, which is expected to close before September 30, subject to regulatory approval and prior information and consultation with Works Councils and employee representative bodies.
The Scotts Miracle-Gro Company, which is listed on the New York Stock Exchange (NYSE:SMG), said that products, such as Roundup, Weedol, Pathclear and Miracle-Gro, would continue to be manufactured and marketed in Europe and Australia as a result of licensing and sub-licensing agreements.
Phil Jones, senior vice president, of Scotts Miracle-Gro International Operations said: "Our international lawn and garden business is the strongest in the marketplace with outstanding brand recognition and a talented and dedicated team of associates.
"We’re delighted to have reached the proposed agreement with Exponent, as they would be an excellent steward of the brands and be well positioned to take the business to the next level. We expect the proposed transaction to be seamless to our retail partners, consumers and associates."
The proposed sale reflects Scotts Miracle-Gro ’s 'Project Focus' announcement in its 2016 accounts to concentrate more of its resources on its US business.
London-based Exponent has been investing successfully in consumer businesses since 2004 and this deal will be its 18th corportate carve out if it goes ahead. Its current and former portfolio companies include businesses such as Quorn Foods, Photobox Group, Loch Lomond Whisky, Big Bus Tours, the Ambassador Theatre Group and Trainline and it has a record of acquisitions from companies including Premier Foods, DMGT, BBC, News Corporation, Umeco, Live Nation, Virgin and Alere. This is set to be its first foray into the lawn and garden market.
Partner at Exponent Simon Davidson said: "These are market-leading garden care brands loved by consumers around the world. We look forward to working with the company and investing further in advertising and innovation to continue to grow these brands and unlock the full potential of the business."