In November, ServiceMaster's board of directors said it's exploring strategic alternatives designed to maximize value to shareholders. To that end, it's working with Morgan Stanley and Goldman Sachs as its advisors and Sidley Austin as its legal advisor.
Included in the company's Form 10Q filed with the Securities and Exchange Commission Nov. 15, is the following comment regarding ServiceMaster’s TruGreen Landcare unit: “The Company is exploring strategic options relating to TruGreen LandCare, including the potential sale of the business.”
“The early indications we’ve seen in the market are that there is a solid interest in TruGreen LandCare, so we think the time is right to evaluate the opportunities," said ServiceMaster CEO J. Patrick Spainhour.
“Our executive team is dedicated to exploring all strategic options that have potential to allow TruGreen LandCare to reach its growth potential,” he added. “In the meantime, we will continue to operate TruGreen LandCare in the best interests of our customers.”
The ServiceMaster Form 10Q reported a 7.9% decrease in revenue in its landscape segment and a $5.2 million decrease in operating income for the third quarter of 2010 compared to 2009. Contract maintenance revenue was down 9%, and enhancement sales were down 8.3%.
TruGreen LandCare, which has operations in more than 100 locations in 40 states, generates about 14% of ServiceMaster's annual revenues. By contrast, the TruGreen LawnCare segment delivers 32% of the company's revenues.
TruGreen Landcare, as many of your remember, was born in the mad dash in the late 1990s to acquire regionally prominent (although not necessarily profitable) landscape companies by national players, such as ServiceMaster and rollup upstart Landcare U.S.A., which several years after the landscape acquisition arms race sold out.— Ron Hall