VOL. 129 | NO. 124 | Thursday, June 26, 2014
ServiceMaster Begins Trading on NYSE
By Amos Maki
The parent company of Memphis-based ServiceMaster Co. LLC began trading on the New York Stock Exchange Thursday, June 26, in an initial public offering of its common stock.
ServiceMaster CEO Robert J. Gillette, holding the gavel, on the floor of the New York Stock Exchange Thursday, June 26, after ServiceMaster Global Holdings Inc. went public and began trading on the exchange.
(Ben Hider/NYSE Euronext)
The move to the market comes a day after ServiceMaster Global Holdings Inc. announced it was pricing the offering of 35.9 million shares at $17 per share. The pricing was below analysts’ estimates of $18 to $21 per share.
The shares opened at $17.45 when trading began Thursday on the New York Stock Exchange under the ticker symbol SERV.
The holding company plans to use the net of what it makes to pay down debt and pay fees to some of its shareholders from a note due 2020 that was issued by ServiceMaster Co. LLC, the subsidiary of the holding company.
The offering is being made through an underwriting group led by J.P. Morgan Securities LLC, Credit Suisse Securities USA LLC, Goldman Sachs & Co. and Morgan Stanley & Co. LLC.
The terms could change with the underwriters being granted a 30-day option to buy up to an additional 5.3 million shares of common stock.
ServiceMaster Global Holdings went private in 2007 when it was acquired by the private equity firm Clayton, Dubilier & Rice and investors for $5.5 billion.
It emerges a much different company than it was seven years ago or even a year ago.
The provider of commercial and residential services as well as franchises employs around 2,300 people in the Memphis area and an estimated 20,000 company-wide, with the Terminix, American Home Shield, ServiceMaster Restore, ServiceMaster Clean, Merry Maids, Furniture Medic and AmeriSpec brands.
The company reported a 4 percent increase in revenues for the first quarter of 2014 compared to the same period a year ago.
The $533 million in revenue came with an $18 million loss from continuing operations in the first quarter attributed to the company’s decision to drop a new operating system at its American Home Shield division.
Dropping the operating system is part of larger turnaround of the company that has come with new leadership.
ServiceMaster took a $48 million non-cash impairment charge in the first three months of 2014 because of the decision to move away from the new system.
During the quarter, ServiceMaster completed the spinoff of its TruGreen lawn care business with a separation of TruGreen’s assets and some of its liabilities through a tax-free pro-rata dividend to stockholders.
The spinoff also came with a pre-tax, non-cash trade name impairment charge of $139 million.
Gillette, who became CEO of ServiceMaster in June, is the company’s third CEO and two and a half years. He and his two predecessors had their struggles with trying to turnaround the TruGreen lawn care business before the decision was made in late 2013 to spin it off.
Reporter Bill Dries contributed to this article.