October
28 -- Deere and Co. announced Monday that it has agreed to sell a majority
interest in its landscapes business to the private equity investment firm of
Clayton, Dubilier and Rice LLC.
In
a news release, Deere said that it will receive approximately $300 million in
cash and initially will retain a 40 percent equity interest in the new company.
In its own news release, Clayton, Dubilier and Rice, or CD&R, said the
carve-out transaction is valued at about $465 million.
John
Deere Landscapes has been included in the Moline-based company's agriculture
and turf segment.
"This
partial sale allows Deere an opportunity to remain as part of a successful
landscapes distribution business," James Field, president of Deere’s
Worldwide Agriculture & Turf Division, said in the release. “At the same
time, Deere will continue to increase its own strategic focus on the global
growth businesses in agriculture and construction and the complementary businesses
in turf and forestry."
With
more than $1 billion in annual revenue, John Deere Landscapes is the largest
North American distributor of landscaping products sold primarily to
professional landscape contractors. It distributes wholesale irrigation, landscape
lighting, nursery, and turf and maintenance supplies.
"CDandR's
focus on growth and deep experience with businesses like ours make them an
ideal partner," said David Werning, John Deere Landscapes president, who
will retain his position. "Deere's ongoing equity ownership reflects its
interest in remaining part of a successful landscapes distribution
business."
David
Wasserman, a partner with CD&R, said John Deere Landscapes is "managed
by a talented executive team that we are very excited to has as partners."
"The business has many attractive features, including scale, breadth of
product offering and service excellence, all of which provide significant
strategic and competitive advantages in supporting the requirements of the
professional landscape contractor," he added.
Paul
Pressler, a CDandR operating partner, will assume the role of chairman upon
close of the transaction, which is expected in December.
"The
new company should benefit from a recovery in residential and commercial
construction activity as well as through the meaningful value creation
opportunities available to drive the business forward," said Ken Giuriceo,
a CDandR partner.
Deere
formed the landscapes business in 2001 when it purchased and merged wholesalers
McGinnis Farms Inc. and Richton International Corp. The business later expanded
with the acquisitions of United Green Mark and LESCO, Inc., in 2005 and 2007,
respectively. Today, John Deere Landscapes is one of the largest U.S. wholesale
suppliers of turf and ornamental agronomics, irrigation, outdoor lighting,
nursery and landscape materials.
John
Deere Landscapes employs more than 2,000 people at about 400 locations in 41
states.
Field
said Deere recognized the investment firm's broad experience and successful
record in distribution businesses and the firm’s longevity and experience in
private equity.
Since
its inception in 1978, CD&R has managed the investment of more than $18
billion in 56 U.S. and European businesses with an aggregate transaction value
of more than $90 billion.
In
an interview with the Quad-City Times, Deere spokesman Ken Golden said John
Deere Landscapes employees "were told today there is no immediate impact
on them. As in any business, future decisions could be made that will result in
changes," he said.
The
sale is unrelated to Deere's announcement last month that it is reviewing
strategic options for the future of its John Deere Water business, which
produces precision irrigation equipment for agriculture customers, Golden said.
Jennifer DeWitt www.qctimes.com
