Secret Site Map
Friday, August 29, 2014

Home News ServiceMaster Details TruGreen Spin Off

ServiceMaster Details TruGreen Spin Off

News Coverage

As it readies for an IPO, ServiceMaster plans to push out its worst-performing unit.

Chuck Bowen | November 20, 2013

Editor’s note: ServiceMaster, parent company of Terminix, announced last week it was spinning off TruGreen LawnCare as a standalone company by the end of the year. As part of ServiceMaster’s third-quarter earnings call last Thursday, ServiceMaster CEO Rob Gillette provided additional details about the decision and noted that the separation of TruGreen LawnCare positions ServiceMaster well for an IPO in the near future. Chuck Bowen, editor of Lawn & Landscape, PCT’s sister publication, filed the following report.

MEMPHIS, Tenn. — Effective Dec. 31, TruGreen LawnCare will be a separate company. It will be owned by private equity-firm CD&R, said Rob Gillette, ServiceMaster CEO, during a third-quarter earnings call Thursday.

The remaining ServiceMaster units – including the Terminix, American Home Shield, Merry Maids and ServiceMaster Clean brands – will stand as a separate company with revenue of $2.3 billion.

“We have significant opportunities to grow these businesses … into adjacent sectors and new markets,” Gillette said on the call. “TruGreen has been distracting.”

The announcement comes as no surprise – the green sides of ServiceMaster’s business have been performing poorly for several years. In 2011, the company unloaded TruGreen LandCare, its commercial landscaping division, to another private equity group for $38 million, a fraction of the $250 ServiceMaster paid for it in 1999.

David Alexander, TruGreen LawnCare president, said the separation allows his division to focus on its core problems, namely a drop in customers of around 300,000 over two years, and an inability to retain new customers. He said the company’s goal is to return to 2012 customer levels by the end of next year.

“We still have some upward battles in terms of customer count. We’re not going to build customer count significantly for two or three more quarters. I believe we’re stabilizing customer count. We’re to a point we can stabilize, but we’re not at a point where we’re going to build for several quarters,” Alexander said on the call. “We had some issues serving everyone. We have not provided all-star service to anyone this year.”

The spin-off also positions the new ServiceMaster well for a potential IPO.

“There’s always the idea of a liquidity event somewhere in ServiceMaster’s future. This brings that liquidity event closer to us, clearly,” said Alan Haughie, ServiceMaster’s CFO.

Ron Edmonds, an M&A consultant based in Memphis, said the news is promising if it means new ownership of TruGreen, but in the short-term means confusion in the market.

“The problem is that there’s a high level of uncertainty. That’s the worst thing for the industry,” Edmonds said. “I don’t think anything is improved by what’s just happened.”
 

Top news

In Memoriam: Vern Toblan

Toblan was the longtime executive director of Pi Chi Omega. He passed away on Saturday.

Syngenta Announces 2014 Fall Savings Program

Syngenta recently announced its 2014 Fall Savings Program, which runs through Sept. 30, 2014. PMPs that qualify for the program are eligible to receive discounts on a variety of Syngenta products, such as Arilon insecticide, Demand CS insecticide and the company's new Zyrox fly granular bait.

PCT Gift Shop Offers Insect-Themed Items for PCOs

PCT magazine, in partnership with the Philadelphia-based Insectarium, is offering a variety of insect-related items to pest control operators via www.pctgiftshop.com.

Reminder: PCT’s M&A Virtual Event 3.0 is Tomorrow

The half-day conference provides expert advice from some of the industry’s leading authorities on mergers and acquisitions and family business issues.

Massey Services Acquires Austin-Based Green Pest Services

The joining of the two companies further expands Massey Services’ residential pest prevention services footprint throughout Texas.