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$4.5B deal for ServiceMaster

If shareholders agree, an investment group will take over the struggling Illinois company.

CHICAGO - Lawn care and pest control provider ServiceMaster Co. agreed Monday to be bought by an investment group in a cash deal valued at $4.5-billion, as the company tries to recover from years of declining financial results.

Bowing to shareholder pressure, the owner of TruGreen Lawn Care, Terminix pest control and Merry Maids cleaning service announced a deal with an investment group led by private equity firm Clayton, Dubilier & Rice Inc.

The announcement came nearly five months after the Downers Grove, Ill.-based company said it was exploring strategic alternatives.

The move followed pressure from shareholders Ariel Capital Management LLC and Newcastle Capital Management LP to consider a sale or buyout.

Under terms of the agreement, ServiceMaster stockholders will receive $15.625 in cash for each outstanding share, which is a 16 percent premium over ServiceMaster's closing price Friday of $13.47 on the New York Stock Exchange.

Clayton also will assume about $1.02-billion in debt.

The deal represents a premium of roughly 31 percent above ServiceMaster's closing stock price of $11.90 on Nov. 27, the last trading day before the company said it would explore strategic alternatives.

ServiceMaster's board has approved the acquisition. Its stockholders will vote on the transaction at a special meeting expected to be held in the second or third quarter.

Since 2004, ServiceMaster's net income has fallen nearly 49 percent to $169.7-million in 2006, even as its revenue climbed nearly 12 percent.

During the quarter ending Dec. 31, the company earned $38.9-million, a 44 percent increase from the same period in 2005.

[Last modified March 19, 2007, 23:13:09]