Downers Grove, IL, October 3, 2006—ServiceMaster, the owner of ServiceMaster Clean carpet maintenance company, announced that it has completed the sale of American Residential Services, its heating, ventilation and air conditioning, and plumbing business to Caxton-Iseman Capital, Inc. and Royal Palm Capital Partners, Inc.
Caxton-Iseman, a New York private equity firm, is the majority investor in the transaction. Donald Karnes and David Slott, former officers of a subsidiary of ServiceMaster, are investors in the venture and will participate in the management of the company.
The cash proceeds of approximately $100 million were in line with expectations and related book value. The Company intends to use the proceeds to pay down debt and to finance acquisitions in other service lines. The transaction, combined with the previously announced sale of American Mechanical Services, will also result in the acceleration of the timing of approximately $33 million of tax benefits into 2006 and 2007 that were previously expected to be realized in annual installments, primarily through 2012.
"This represents the culmination of a very comprehensive process led by our outside advisors William Blair & Company," stated Ernie Mrozek, President and Chief Financial Officer. "We are pleased that our people will be joining reputable, well financed buyers and that the business will remain headquartered in Memphis."
The Company also announced today that its Terminix business unit has acquired the assets of Safeguard Pest Control. Safeguard Pest Control operates in 16 markets across the United States with annual revenues of over $23 million. ServiceMaster expects a modest but positive impact on fourth quarter 2006 earnings per share from this transaction.
"This transaction represents a continuation of our strategy to reallocate our capital into higher growth opportunities and creates new opportunities for Terminix to improve its service efficiency and processes," said J. Patrick Spainhour, Chairman and Chief Executive Officer. "Safeguard is a large, successful company and we believe that we will be able to take advantage of their skilled people and excellent customer relationships. We are excited to welcome them to Terminix and to the ServiceMaster team."
