1st Sep 2015 06:17
LONDON (Alliance News) - Business services company Rentokil Initial PLC on Tuesday said it has agreed a USD425.0 million deal to acquire US-based pest control company The Steritech Group Inc.
FTSE 250-listed Rentokil said the deal will strengthen its position as the third-largest pest control services provider in the US market and will make it the third-largest player in the Canadian market.
The purchase of Charlotte, North Carolina-based Steritech means Rentokil's North American operation now generated revenue of USD800 million per year and is its largest division. It comes following the agreement struck by Rentokil on Friday to acquire Chicago-based Anderson Pest Solutions.
The deal will be financed via existing cash resources and a new GBP300.0 million debt facility, Rentokil said.
Rentokil predicted year-three cost synergies of at least USD25 million from the acquisition. It said the transaction is expected to deliver profit before interest, tax and amortisation of USD25 million to USD30 million in 2016 and to achieve EBITA returns in excess of 12% by 2018.
"For some time we have been pursuing a growth strategy in North America, the world's largest pest control market, with Steritech at the top of our target list. It has an outstanding management team with a proven track record and a reputation founded on technical expertise and a premium service, similar to ours. It is also highly geographically complementary to our existing US business," said Andy Ransom, Rentokil's chief executive.
By Sam Unsted; [email protected]; @SamUAtAlliance
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