Virgin Group Acquisition Corp. II (VGII), a publicly traded special purpose acquisition company sponsored by Virgin Group, has closed its acquisition of Grove Collaborative and will change its name to Grove Collaborative Holdings. Grove Collaborative Holdings will take Grove Collaborative public on the New York Stock Exchange under the ticker symbol GROV, while Grove Collaborative Holdings itself trades under GROV WS.
The transaction included an $86 million PIPE (private investment in public equity) investment from an affiliate of VGII’s sponsor along with new and existing Grove Collaborative investors, including Lone Pine Capital, Sculptor Capital Management, General Atlantic and Paul Polman. The deal also included a $50 million backstop subscription agreement with VGII and Corvina Holdings, pursuant to which Corvina subscribed for and purchased $27.5 million of common stock from Grove. Corvina also subscribed for and purchased $16.7 million of common stock of the combined company.
Grove Collaborative, which offers a range of sustainable household and personal care items, is serious about its commitment to becoming plastic-free, which the brand aims to achieve by 2025. It also has brought on Drew Barrymore as an investor and Global Brand and Sustainability Advocate, to work with Grove’s product development team on its flagship home care brand Grove Co. and join the retailer’s advocacy work.
The company reported revenue of $383.7 million for fiscal 2021, up 5.3% from 2020 and 65% from 2019. However, it fell short of its $385 million goal, and Q4 2021 sales were down 6.2% year-over-year. The retailer’s net loss margin reached 36.7% for Q4 2021 and 35.4% for fiscal 2021, but it expects to reach profitability by 2024.
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Grove Collaborative laid off 17% of its corporate workforce in March 2022 as it prepared for the merger and looked for ways to keep itself on the path to profitability. The retailer also expects that “the inevitable transition away from single-use plastic will only accelerate” in coming years, which will benefit its sustainable options, according to Stuart Landesberg, CEO of Grove Collaborative.
“Today marks an important milestone, and we are thrilled to close our Business Combination with VGII and begin our next chapter as a publicly traded company,” said Landesberg in a statement. “I would like to thank our partners at Virgin, our board of directors, and all of my colleagues at Grove who have contributed to this achievement. Our path to profitability is clear and we will continue to advance our mission to transform consumer products into a positive force for human and environmental health.”
