Scotts LawnService to Merge with TruGreen

***update on 12/11/2015m, at 3 p.m.***

NEW YORK – During its investor and analyst day, Scotts Miracle-Gro announced a definitive agreement to sell off its lawn care division (Scotts LawnService) to TruGreen for $200 million in cash and a 30 percent stake.

The acquisition comes on the heels of record sales for both companies. According to data presented by CFO Randy Coleman, Scotts LawnService posted record revenue of $289 million, and TruGreen grossed $1 billion. With the acquisiton, TruGreen’s local network of branches and franchise locations will serve approximately 2.3 million residential and commercial customers across the U.S. and Canada with lawn, tree and shrub care, representing approximately $1.3 billion in revenue. TruGreen president and CEO David Alexander will lead the new company.

“This opportunity further accelerates the transformation TruGreen has experienced in the last two years achieving significant gains in revenue, customer growth and employee satisfaction,” Alexander said.

Clayton, Dublier and Rice, the private equity company that purchased TruGreen from ServiceMaster in 2011, will own 70 percent of the combined companies, whcih will operate under the TruGreen brand. As a result of the sale, Scotts will own 30 percent of TruGreen, hold two of the seven board seats and take $200 million in cash. Jim Gimeson, currently president of Scotts LawnSerivce, will move to TruGreen as chief operating officer. 

Coleman said he expects the sale to close sometime in March 2016.

Scotts, which had considered acquiring TruGreen in the past, retains options to participate as a seller in a future IPO or sale to a third party, and reserves the option to purchase 100 percent of the new TruGreen. 

"I can't tell you what course we’ll take right now,” Coleman said. “The decision we make down the road will be based on what's best for our shareholders.”

John Compton, a CD&R operating partner and former PepsiCo president, will continue to serve as TruGreen’s chairman.

“We believe strongly in the commercial logic and exciting long-term growth prospects of merging these two great brands, and we expect our combined capabilities to offer a highly compelling value proposition to customers,” Compton said

Since Alexander became president and CEO of TruGreen, he has been very active in mergers and acquisitions, compared to the company’s activity before he was hired. He has overseen seven mergers or acquisitions, not including this one, since taking over the role in 2012. 

In September, the company made its biggest acquisition at the time when it acquired Noon Brothers, an $8-million company based in Boston.

The company announced in November it will offer a lawn sprinkler maintenance service in 15 to 20 markets in 2016. The service will extend throughout the nation next year, Vice President Brent Armstrong said. The service has been active this year in eight cities as a pilot program.

These moves back up what Alexander told Lawn & Landscape when we spoke with him earlier in the year and he described TruGreen’s future approach to acquisitions as “historic."

"If you go back two or three years, and you look at how TruGreen was acquiring, that’s kind of what we want to do now. We want to invest – it’s not a small number, it’s in the millions," he said. "So, we want to invest in acquisitions and this is the year we’ll start back. We have a half dozen or so in the pipeline that we’re seriously considering. We’ll put some more in soon that we’re beginning to consider, so it is something we’re getting back into."