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Stockholders Reject Scotts Miracle-Gro's Offer Price for AeroGrow
Ohio Ag Connection - 02/18/2021

Stockholders of AeroGrow International, Inc., Denver, Colo., representing approximately 1.7 million shares announced their intention to reject Scotts Miracle-Gro's (SMG) offer of $3 per share merger consideration and instead exercise their right to dissent and demand fair payment for their shares.

Scotts Miracle-Gro is headquartered in Marysville, Ohio.

In the dissenters' rights proceedings, these stockholders will demonstrate that (1) SMG egregiously manipulated both the trading and appraised price of AeroGrow stock, (2) the AeroGrow Special Committee and Board of Directors did little to mitigate SMG's abhorrent behavior and instead agreed to merger consideration that they knew was substantially below fair market value, and (3) both the trading price of AeroGrow's stock prior to SMG's manipulative actions and an assessment of AeroGrow's value by an independent valuation expert clearly establish that the offered price is wholly inadequate.

In the past year, AeroGrow has expanded its product offerings with new and higher average-selling-price products and has seen increasing sell-through in its distribution channels. AeroGrow is also benefitting from demand for home grown food and the legalization of cannabis. Following solid fiscal year 2020 results, AeroGrow announced a record first quarter fiscal year 2021, with revenue up 267%, gross margin improvement of 1,200 basis points, and its first-ever, first quarter profit of $2.7 million. In its earnings release, AeroGrow noted that "favorable sales trends continue," emphasizing that this is a trend and not a temporary blip.

The Stockholders believe that SMG engaged in manipulative practices in order to acquire AeroGrow at a substantial discount to fair market value. When SMG announced its intent to acquire AeroGrow in its Schedule 13D filed with the SEC on August 18, 2020, AeroGrow's stock was trading at approximately $5.70 per share. Because there were no definitive developments in the acquisition process that would necessitate such filing, it appears that the gratuitous announcement that SMG intended to acquire AeroGrow for $1.75 per share was intended to put a damper on the steadily increasing stock price. The market-manipulating announcement had its intended impact and the stock price immediately fell to just below $3.00. Subsequently, on November 11, 2020, AeroGrow entered into a merger agreement with SMG, which provided for merger consideration of $3.00 per share, a near 50% discount to the trading price prior to SMG's Schedule 13D announcement.

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