Gaiam, Real Goods Announce Merger
Published: Wednesday, November 01, 2000
Under the terms of the agreement, Real Goods shareholders will receive one share of Gaiam Class A stock in exchange for every 10 shares of Real Goods. Additionally, shareholders will receive $1 Gaiam gift certificates for each Real Goods share they own—up to $100.
The deal, which is subject to Real Goods shareholder approval, is expected to close in 1Q01, says Lynn Powers, Gaiam president, at which time Real Goods’ Santa Rosa, Calif., headquarters will move to Gaiam’s Broomfield offices. Its distribution center will also close and move to Gaiam’s distribution facility in Cincinnati. Altogether the consolidations can save the companies $3 million in annual operating costs, Powers says.
Real Goods’ Ukiah, Calif., call center, however, will be remain open, as will its four California retail stores located in West Los Angeles, Los Gatos, Berkeley and Hopland.
“We don’t have any plans to change the stores except to add some of Gaiam’s soft goods to them,” Powers says. “We just plan to improve the mix and improve margins.”
Also to remain intact is Real Goods’ 4-year-old Solar Living Center, a 12-acre solar-powered demonstration site in Hopland, which John Schaeffer, Real Goods’ chairman and founder, says is “his heart and his mission.” The center, which attracts 150,000 visitors a year, is maintained by the nonprofit Institute for Solar Living.
“The good news is that [Gaiam] is very much attracted to what we are doing here. [It] has donated money to keep it going,” Schaeffer says. “Eventually we may add yoga classes and other Gaiam-related activities. I think it will put the center on the map.”
Although the closing of its headquarters comes at the cost of lost jobs, Schaeffer is optimistic he may be able to hire some back, since the companies will expand the Real Goods call center to handle overflow from Gaiam’s
Colorado call center.
“We have about 100 employees now, so we’re hoping to hire back at least half of them,” Schaeffer says. “We have a lot of loyal employees who have been around seven to 10 years, and we’d like to keep them if we can.”
Schaeffer will stay on as president of Real Goods. With offices in Hopland and Ukiah, he will be in charge of the Real Goods catalog, which he says will remain separate from Gaiam’s Harmony catalog. He will also be spokesperson for the company and focus on product development. For now, Schaeffer says, Real Goods will continue as a corporation but may eventually become a division of Gaiam.
Carole Buyers, VP at the Denver office of Tucker Anthony Capital Markets, approves of the merger. Considering how Gaiam caters to the personal development and healthy lifestyles markets and Real Goods to the sustainability and environmental markets, Buyers says in an update released Oct. 16 that Real Goods is an “excellent fit” for Gaiam, since both companies cater to the Lifestyles of Health and Sustainability (LOHAS) market and have similar corporate mission statements.
Upon news of the merger, Tucker Anthony and U.S Bancorp Piper Jaffray reiterated their Strong Buy and Buy ratings, respectively, for Gaiam. The company on Oct. 27 closed at $16.25/share, while Real Goods closed at $2.03/share.