The ServiceMaster Company announced today that it has entered into a definitive merger agreement to be acquired by an investment group led by Clayton, Dubilier & Rice, Inc. (CD&R) for a total enterprise value of approximately $5.5 billion, including the assumption of existing ServiceMaster debt.
Under the terms of the agreement, ServiceMaster's stockholders will receive $15.625 in cash for each outstanding ServiceMaster share. This represents a premium of approximately 16% over ServiceMaster's closing share price of $13.47 on Friday, March 16, 2007 and a premium of approximately 31% over ServiceMaster's closing share price of $11.90 on November 27, 2006, the last trading day before the announcement by the company that the Board of Directors would explore strategic alternatives.
The ServiceMaster Board of Directors has approved the merger agreement and recommends adoption of the agreement by ServiceMaster's stockholders. Completion of the transaction is contingent upon customary closing conditions, including the approval of a majority of ServiceMaster's outstanding shares and regulatory approval. Stockholders will be asked to vote on the proposed merger at a special meeting which the company currently expects to be held during the second quarter. Until the closing of the transaction, the company anticipates continuation of its existing dividend policy.
"The Board of Directors, with the aid of management and our financial advisors, conducted a thorough review of strategic alternatives available to the company and concluded that this transaction is in the best interests of our stockholders," said J. Patrick Spainhour, Chairman and Chief Executive Officer of ServiceMaster.
"The Board's support is based on the conviction that this transaction will deliver value to shareholders that is superior to what the company could achieve under its current business plan," said Spainhour. "We are a company with a unique heritage and a very bright future, which we believe will be enhanced by the new ownership structure. CD&R will bring valuable insight to our business and contribute to the acceleration of profitable growth."
Donald J. Gogel, Chief Executive Officer of CD&R, said, "We have been interested in ServiceMaster for years, and have always felt that its management team, unique mix of market leading brands and leading industry positions were a great fit with CD&R's investment approach. We believe the company will be better positioned as a non-public enterprise to pursue management's long-term growth plans and to further enhance its attractive collection of market-leading service businesses."
"Working with the ServiceMaster team, we intend to invest in the key strategic initiatives that will accelerate growth in each business unit, while maintaining a strong stewardship of the core values that have been the foundation of the company," concluded Gogel.
Richard J. Schnall, the CD&R partner who led the transaction, said, "We believe our past success working with large, branded, multi-location service businesses will prove to be of significant value as we partner with ServiceMaster's management team to move the company forward over the long term."
After completion of the transaction, Clayton, Dubilier & Rice announced that George W. Tamke, CD&R Operating Partner, will assume the position of Chairman of the ServiceMaster Board of Directors. Mr. Spainhour will continue to serve as Chief Executive Officer. Mr. Tamke is former co-CEO of Emerson Electric and previously served as the lead operating partner for CD&R investments in Kinko's, Culligan and Hertz.
Morgan Stanley and Goldman Sachs acted as financial advisors to ServiceMaster. Both firms, as well as Greenhill & Co., provided fairness opinions to the ServiceMaster Board of Directors. Sidley Austin served as legal adviser to ServiceMaster in connection with the transaction. Banc of America, Citigroup Global Markets Inc., JPMorgan and Wachovia Securities provided strategic advisory services to CD&R and Banc of America Securities LLC, Citigroup Global Markets Inc., and JPMorgan Chase Bank, N.A. have committed to provide debt financing for the transaction. In addition, Banc of America Capital Investors, Citigroup Private Equity and JPMorgan have committed to provide equity financing. Debevoise & Plimpton is acting as legal advisor to CD&R.
Source: www.Servicemaster.com