Scotts Miracle-Gro Co. is getting out of the service business, announcing it has sold its 30 percent stake in TruGreen, the nation's No. 1 lawn service, for approximately $234 million. The buyer, private equity firm Clayton Dublier & Rice, previously owned 70 percent of the joint venture, which was formed by the 2016 merger of Scotts LawnService division and TruGreen and created the largest do-it-for-me lawn service company in America.
“Using these proceeds to reduce our debt should allow us to lower our debt-to-EBITDA ratio below 4.0 by the end of fiscal 2019 and to 3.5 times debt-to-EBITDA by the end of 2020. At that level, management would once again begin to explore options to proactively return more cash to shareholders,” said ScottsMiracle-Gro CFO Randy Coleman.
Here are some other notable details of the deal:
- Scotts received additional cash proceeds of $18.4 million from moving the joint venture's debt to a third party.
- The combined proceeds, approximately $120 to 140 million after taxes, will immediately be applied to reduce the company’s debt.