The company is in discussions with another party regarding a partnership involving a potential combination that, if completed, could achieve these goals.
Chairman and chief executive officer Jim Hagedorn said: "Our business in Europe has improved nicely over the past two years, mostly as the result of previous restructuring efforts."
He added: "But we find ourselves at a challenging inflection point. Continuing to invest heavily in the existing business does not make economic sense, nor does divesting the business at this time. After extensive analysis and dialogue, we have determined it is in the best interest of our consumers, our retailers, our associates and our shareholders to explore strategic alternatives for our European business. If we are able to move forward in this regard, we would do so in consultation with all stakeholders as needed."
Hagedorn has announced a series of initiatives to maximise the value of its non-core assets in order to concentrate its focus on emerging categories of the lawn and garden industry in its core US business.
Hagedorn said: "We are convinced that significant opportunities remain in our US business in emerging areas like organic and natural products, live goods, nutrients for hydroponic gardening, the development of water positive landscapes and bringing internet-enabled technology to the garden. In an effort called ‘Project Focus,’ we are committing to invest the human and financial resources necessary to win in each of these areas.
"This commitment requires choices, which means we must re-evaluate the assets in our portfolio that we no longer see as core. The actions we are taking or contemplating are all designed to enhance the value of each asset we own while also giving us maximum optionality going forward."
The company announced it has entered a definitive agreement to contribute Scotts LawnService in a joint venture with TruGreen Holdings Inc., an entity controlled by private equity firm Clayton, Dubilier & Rice (CD&R). At the closing of the transaction, ScottsMiracle-Gro will own an equity stake of approximately 30 percent in the combined business, with a fund managed by CD&R holding the controlling interest.
The combination of the two businesses would create a lawn service business with approximately 2.3 million customers and approximately $1.3 billion in revenue that is better equipped to bring innovation and improved service to the consumer and drive category growth.
Upon closing the deal, ScottsMiracle-Gro expects to receive a cash distribution from the joint venture of approximately $200 million and plans to use those proceeds to fund other strategic investments.
A portion of those proceeds are being contemplated for the potential joint venture for the company’s European consumer business.
The company also announced that it expects to make a significant investment in the live goods industry during the next 90 days. The investment would represent a minority interest in an industry-leading brand, allowing ScottsMiracle-Gro to benefit from the continued growth in the live goods category and to grow its existing gardening brands through improved cross-merchandising efforts.
"The number of consumers participating in this space continues to increase, and it is important that we participate more directly," Hagedorn said. "Being actively involved in live goods helps move us from a gardening products company to a true gardening company, a shift that strengthens our relationship with our consumers and helps keep our brands relevant in their lives."
Increased investment in businesses that market nutrients and other inputs for hydroponic and indoor gardening is also likely in 2016. In 2015, the Company purchased nutrient and growing media brands in the hydroponic space and is exploring options to expand its portfolio.
"Indoor and hydroponic gardening is one of the fastest growing segments of our industry and having a more complete product offering will help us build stronger relationships in this category," Hagedorn said. "Therefore, we’re exploring opportunities to invest in areas like precision irrigation, lighting and indoor gardening systems."