16th Dec 2021 09:25
(Alliance News) - Rentokil Initial PLC noted Thursday its debt rating has been reaffirmed by S&P Global Ratings.
The Crawley, Sussex-based said its BBB corporate credit rating has been reaffirmed with "outlook stable". S&P describes a BBB credit rating as having "adequate capacity to meet financial commitments, but more subject to adverse economic conditions".
Rentokil added that S&P is expected to move its business risk profile from satisfactory to strong in order to reflect the company's increased scale.
S&P says that a business risk profile comprises of the risk and return potential for a company in the markets in which it participates, the competitive climate within those markets, the country risks within those markets, and the competitive advantages and disadvantages the company has within those markets.
Rentokil says the debt rating affirmation follows its announcement of the USD6.7 billion acquisition of Tennessee-based termite and pest control service Terminix Global Holdings Inc.
Chief Executive Andy Ransom said: "We are pleased with the reaffirmation of our rating by S&P and their view that the transaction will have a transformational impact on Rentokil, significantly improving our scale and density, and enhancing our position in the US, the largest pest control market in the world. It reinforces our confidence that the combination of Rentokil and Terminix will deliver substantial value creation for shareholders. The transaction is expected to be mid-teens percent accretive to Rentokil's earnings per share in the first full year post completion and, including at least USD150m of cost synergies, to exceed the company's cost of capital by the third full year following completion."
Shares in Rentokil were down 1.0% at 517.00 pence on Thursday morning in London.
By Heather Rydings; [email protected]
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