– USA, TN – ServiceMaster Global Holdings, Inc. (NYSE:SERV), a leading provider of essential residential and commercial services, today announced its intention to separate its American Home Shield business from its Terminix and Franchise Services Group businesses, as well as the appointment of Nikhil Varty as Chief Executive Officer of the Company and as a member of the Board, effective immediately.
The separation of AHS is expected to result in two publicly traded companies – ServiceMaster and AHS – by means of a spin-off of the AHS business to ServiceMaster shareholders, in a transaction intended to be tax-free. The transaction is expected to be completed in the third quarter of 2018. ServiceMaster will disclose additional information regarding the separation, including historical financial and capitalization information, in a Form 10 registration statement expected to be filed with the Securities and Exchange Commission during the next several months.
Both ServiceMaster and AHS remain committed to Memphis, Tennessee, and intend to maintain their headquarters there.
Following completion of the separation, each company’s board and management team will be able to pursue its distinct strategies, and focus on its own long-term growth and profitability. The separation is expected to result in increased growth opportunities and greater market clarity for both companies. Additional benefits of the separation include:
Distinct investment identity – With the separation, investors will be able to evaluate and invest in each business with greater clarity based on its individual merits and future prospects.
Enhanced strategic and management focus – The dedicated board and management team of each company will be able to pursue its distinct strategies, and focus on its own long-term growth and profitability.
More efficient allocation of capital – Each company will concentrate its financial resources solely on its own operations and will have greater flexibility to invest capital in the manner appropriate for its unique strategy and opportunities.
Independent access to capital markets – Each company will have individual access to the capital markets and more flexibility to capitalize on its individualized growth opportunities. Each company will have its own pure play equity currency to use for corporate development and for management equity compensation.
Mark Tomkins, Chairman of the ServiceMaster Board of Directors, commented, “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. 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.
“As separate entities, ServiceMaster and AHS will be better able to focus on their unique growth strategies. The transaction will allow ServiceMaster to better implement a capital structure and capital management strategy appropriate to each business. We believe this transaction is in the best interests of our shareholders and will produce attractive returns and enhanced long-term value.”
To oversee the separation process and position each of ServiceMaster’s businesses for long-term growth, the Board also named Nikhil Varty as CEO effective immediately, replacing Rob Gillette. Mr. Varty is a dynamic leader with extensive experience leading and managing large, complex organizations for high-performing multi-national corporations, including WABCO Holdings Inc., Honeywell International, Inc. and PricewaterhouseCoopers, over his 30-year career. Under his innovative and results-oriented leadership, Mr. Varty has a proven track record of establishing strategic direction, driving revenue growth and profitability and leading companies to achieve operational excellence.
Mr. Tomkins said, “We are also pleased to announce the appointment of Nikhil Varty to the role of CEO during this important time for ServiceMaster. With more than three decades of deep operational expertise and strategic leadership experience, Nik is uniquely qualified to lead ServiceMaster into the next chapter of its growth story. He has direct experience developing and executing successful global business strategies, as well as achieving record returns on investments and delivering superior shareholder value on a sustainable basis. With a background in transforming companies through building the right organization, structure and talent, the Board firmly believes that Nik is the right leader to lead ServiceMaster as it looks to execute on the next stage of its growth strategy. The entire Board looks forward to working closely with Nik and continuing on our path to become the number one choice of customers for essential services through empowered people and convenient access.”
“I am very excited to join ServiceMaster and am eager to begin working closely with the Board and management team to grow and enhance opportunities for our employees, customers and partners,” said Mr. Varty. “I am very supportive of the Company’s decision to separate its businesses and believe that it is the right and necessary step at this point in time. My strategic focus will be to deliver superior results, identify levers for growth and develop the right talent, all while aiming to consistently beat expectations. I am committed to executing on the Company’s strategic plan and am confident that our talented team will work together to capitalize on existing and future growth opportunities and enhance shareholder value.”
Mr. Tomkins concluded, “We thank Rob for his significant contributions and years of dedicated service to ServiceMaster and Memphis. His leadership has brought ServiceMaster to the point where we can take this transformative step in our company’s history. We wish him all the best in his future endeavors.”
Mr. Gillette is expected to be available to the Company on a transitional basis and to work with Mr. Varty during his remaining time at the Company in order to ensure a smooth transition.
About Nikhil Varty
Mr. Varty most recently served as President of the Americas and Global Vice President of Mergers & Acquisitions at WABCO, where he achieved a major turnaround in market position and generated double digit market outperformance. While in that role, Mr. Varty was also instrumental in driving growth for WABCO in South America, executing a complete restructuring of regional operations and significantly growing market share.
Mr. Varty previously served as Vice President and Business Unit Leader for WABCO’s Compression & Braking business unit in Brussels, Belgium, leading a transformation that resulted in more than doubling the business in seven years while significantly improving profitability. Before WABCO, he served as the Global Director of Finance for Pharmaceuticals and Fine Chemicals at Honeywell International. Mr. Varty received his B.S. in Financial Accounting & Management and M.S. in General Management from Bombay University in Mumbai, India. He received his MBA from the University of Scranton.
About American Home Shield
AHS is the national leader in home warranties covering the repair and replacement of many major home systems, components and appliances. AHS reported full-year 2016 revenues of $1.02 billion.
AHS is a proven market leader with a stable customer base and a growing market in the home warranty industry. It has significant scale and brand recognition in a fragmented market, with nearly 2 million customers across all 50 United States and a national network of approximately 14,000 pre-qualified contractors. AHS has demonstrated consistent performance and significant cash flow generation with significant recurring revenue and a high customer retention rate. AHS is defined by its operational and customer service excellence and strong marketing and lead generation capabilities through both the Real Estate and Direct-to-Consumer Channels to market.
ServiceMaster’s Terminix business maintains a strong market position, with a 21 percent share of the $8 billion U.S. pest control services market. Management has recently implemented a number of strategic investments to strengthen the Terminix business that focus on talent, technology and customers. Following the separation of AHS, ServiceMaster will be better positioned to continue strategic reinvestment in Terminix’s field operations and sales force and progress on the path to higher organic growth and improved customer retention.
Franchise Services Group which will remain part of ServiceMaster, holds a leading market position in strong and trusted brands such as AmeriSpec, Furniture Medic, Merry Maids, ServiceMaster Clean, and ServiceMaster Restore. FSG will continue its key initiatives to drive results, such as helping franchisees drive customer-level growth.
For more information : http://www.servicemaster.com
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