ScottsMiracle-Gro Signs Definitive Agreement to Acquire Action Pest Control

ScottsMiracle-Gro Signs Definitive Agreement to Acquire Action Pest Control

The Scotts Miracle-Gro Company announced that its subsidiary EG Systems, Inc., doing business as Scotts LawnService, has signed a definitive agreement to acquire the assets of Action Pest Control, Evansville Ind., which ranked 56th on the 2014 PCT Top 100 list, with annual revenues of $11.6 million. The transaction, which is expected to close by January 2015, would mark Scotts’ first acquisition of a structural pest control business.

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October 20, 2014

MARYSVILLE, Ohio — The Scotts Miracle-Gro Company, a leading marketer of branded consumer lawn and garden products, today announced that its subsidiary EG Systems, Inc., doing business as Scotts LawnService, has signed a definitive agreement to acquire the assets of Action Pest Control, Evansville Ind., which ranked 56th on the 2014 PCT Top 100 list, with annual revenues of $11.6 million.

The transaction, which is expected to close by January 2015, would mark the company's first acquisition of a structural pest control business. For more than a year, Scotts LawnService has been operating a pest business in Florida using the company's Ortho brand. The effort has provided a successful proving ground for a business model that offers consumers the benefit of a lawn and pest service from the same provider, Scotts reports.

"Just as the Scotts brand has resonated with our lawn service business, the Ortho brand shows great long-term promise for home pest control," said Jim Hagedorn, chairman and chief executive officer. "The demographics and economics of the service industry are strong strategic fits for our business. We are excited to complete the acquisition of Action Pest and see it as an important step forward in executing our long-term growth strategy."

Scotts LawnService, with anticipated sales of approximately $260 million in fiscal 2014, is currently the No. 2 player in lawn service. Given the fragmented nature of the $7 billion home pest control category, the company says it believes it can complement organic growth in lawn service by consistently expanding its pest control platform.
Scotts has been exploring the structural pest control market for several years. During a February conference call to review the first fiscal quarter, Barry Sanders, Scotts’ president and chief operating officer, told analysts the company was planning to acquire at least one regional pest control service company in2014. “We currently are exploring acquisition opportunities in (the pest-service) space, and I wouldn’t be surprised ... if we don’t make our first test acquisition in 2014,” Sanders said.

The leadership team from Scotts Lawn Service is (from left to right) CFO Rob Walter; President Mark Wilhelmi; COO Jim Gimeson; VP Business Development Kemp Anderson; and VP of Finance Mike Goodrich.

Action Pest Control was founded in 1946 as R.O. Williams Company in Evansville, Ind.  In 1986, Kevin Pass, who at the time was company’s license holder and trainer, purchased the business. Pass has rapidly grown the business in the last 27-plus years, both organically and via acquisition, including the 1996 acqusition of A+ Pest Control, which doubled the company’s size and presence in Kentucky. Today, Action Pest provides a comprehensive range of residential and commercial pest control services to homeowners and businesses throughout Indiana, Kentucky, and Illinois. Scotts says it expects the Action business to add annual sales approaching $15 million and for the transaction to be earnings accretive in fiscal 2015.

Terms of the deal were not disclosed.

Check back to PCT Online for additional reporting on this story.

Additional reporting by PCT Internet Editor and Managing Editor Brad Harbison.