The two largest companies in the lawn care segment are now one, following TruGreen and Scotts LawnService’s announcement to enter into a joint venture. Combined, the companies have approximately 2.3 million customers and more than $1.3 billion in annual revenue.
The combined business will operate under the TruGreen brand and will be based in Memphis, Tenn., where TruGreen’s headquarters is located.
“This opportunity further accelerates the transformation TruGreen has experienced in the last two years achieving significant gains in revenue, customer growth and employee satisfaction,” said TruGreen President and CEO David Alexander, who will lead the combined company.
At the closing of the transaction, which is expected in March, Scotts Miracle-Gro Co. will own approximately 30 percent of the combined business, with a fund managed by private equity firm Clayton, Dubilier & Rice (CD&R) holding the controlling interest. CD&R has owned TruGreen since ServiceMaster spun it off last year. Scotts also will control two of seven board seats and at close, Scotts expects to receive $200 million in cash.
Jim Gimeson, president of Scotts LawnService (SLS), will join the combined company as COO. John Compton, a CD&R operating partner and former PepsiCo president, will continue to serve as TruGreen’s chairman.
For fiscal year 2015, which ended in September, SLS reported $288.5 million in revenue. The company had a record year in terms of both revenue and profits, executives said during a presentation to analysts and investors Dec. 10.
But the business unit doesn’t fit into the Scotts Miracle-Gro’s plan to focus on its core business: North American consumer gardening. Scotts Chairman and CEO Jim Hagedorn called the deal “difficult and bittersweet” but said the move is part of the company’s “Project Focus.”
The deal gives Scotts Miracle-Gro options, Hagedorn said, noting the company has looked at purchasing TruGreen several times over the past few years because it believes in the potential of the “do-it-for-me” lawn segment. For example, if the new combined company is eventually sold as part of a public offering, Scotts may participate in the process or retain its minority ownership position. The company also could participate in a potential outright sale of the business to a third party or buy 100 percent of the combined entity at a later date.
TruGreen and SLS ranked No. 2 and No. 4, respectively, on the 2015 LM150 list of the largest landscape companies. TruGreen reported 2014 revenue of $936 million; SLS reported $316 million for 2014.
Related:
Industry members react to TruGreen, Scotts LawnService merger
Timeline: History of TruGreen, Scotts LawnService
TruGreen/Scotts LS merger goal: Retain customers, staff
.@TruGreen & @ScottsLawnServ merge, creating a $1.3 billion lawn care company #BreakingNews https://t.co/kbAt7p34K9 pic.twitter.com/BKyhvsvW2L
— Landscape Management (@LandscapeMgmt) December 10, 2015
