14th Dec 2021 09:13
(Alliance News) - Rentokil Initial PLC on Tuesday said it has struck a cash and shares deal to buy pest control peer Terminix Global Holdings Inc, bolstering the FTSE 100's company's presence in North America.
The deal values Terminix at USD6.7 billion. Crawley-based Rentokil will issue Terminix shareholders 643.3 million new shares, worth about GBP3.86 billion, and pay USD1.3 billion in cash.
The deal implies a value of USD55.00 per Terminix share, a 47% premium to its share price on Monday. Terminix closed 0.2% lower at USD37.41 each in New York on Monday.
Rentokil shares initially opened higher in the wake of the news on Tuesday, rising 6.0% to hit a record high of 662.00 pence. However, the stock has since dipped and was trading 3.9% lower at 600.20p each. It has a market capitalisation of GBP11.1 billion.
Shareholders in Memphis-based Terminix will own 26% of the enlarged company.
The acquisition offers Rentokil a "substantially increased scale in North America". There will be cost synergies of at least USD150 million by the third full year following the deal's completion.
"These are two highly complementary businesses with a similar operational playbook focused on supporting great people to provide outstanding customer service across Pest Control and Hygiene & Wellbeing. The combination will deliver further investment and the sharing of best practices to enable our talented teams to better serve customers, protecting them from the growing threat of pests and meeting their future needs," Rentokil Chief Executive Andy Ransom said.
"We will open our first innovation centre in the US and provide our industry-leading innovations and digital technologies to a far larger customer base. This is a win-win-win for colleagues, customers and shareholders."
By Eric Cunha; [email protected]
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