VOL. 132 | NO. 147 | Wednesday, July 26, 2017
ServiceMaster to Spin Off Business, Gillette Out as CEO
Daily News staff
Shares of Memphis-based ServiceMaster Global Holdings Inc. were trading 6 percent higher Wednesday morning, July 26, on news that the company has made a change in chief executive offer, effective immediately, and will spin off its American Home Shield (AHS) business from its Terminix and Franchise Services Group (FSG) businesses.
Nikhil Varty becomes CEO, replacing chief executive Rob Gillette, effective immediately, according to a company press release. Varty also takes a seat on the company’s board of directors.
The separation of AHS is expected to result in two publicly traded companies – ServiceMaster and AHS, according to the home services company. The spin-off of the AHS business is a transaction that is intended to be tax-free. It is expected to be completed in the third quarter of 2018.
ServiceMaster said it will disclose additional information regarding the separation, including historical financial and capitalization information, in a Form 10 registration statement to be filed later with the Securities and Exchange Commission.
Both ServiceMaster and AHS intend to remain in Memphis and maintain their headquarters there, the release said.
“Following a careful and thorough review of the business, it’s clear that ServiceMaster’s pest control and home warranty businesses have distinct, separate opportunities for profitable growth,” Mark Tomkins, chairman of the ServiceMaster board of directors, said in the release. “The plan announced today will allow both ServiceMaster and AHS to leverage their market-leading positions and focus on realizing their respective growth potential. Shareholders of both companies will be able to participate in this upside potential.”
Tomkins added that as separate entities, ServiceMaster and AHS will produce more attractive returns and long-term value for shareholders.
Varty has experience leading and managing large, complex organizations for multi-national corporations, including WABCO Holdings Inc., Honeywell International Inc. and PricewaterhouseCoopers.
His track record of establishing strategic direction, driving revenue growth and profitability, and leading companies to achieve operational excellence over his 30-year career prompted the change at CEO.
No additional information was given about Gillette, who has been CEO of ServiceMaster since June 2013.