12th Jun 2024 10:42
(Alliance News) - News that the activist investment firm of billionaire investor Nelson Peltz has become a major shareholder in Rentokil Initial PLC is likely to prompt further pressure for a listing move to the US, analysts on Wednesday said.
Trian Fund Management LP is now a top 10 shareholder in the Crawley, England-based pest control and hygiene firm, Bloomberg reported on Tuesday after the London market close, adding it isn't clear the exact size of the stake.
In an emailed statement to Bloomberg, Trian confirmed it held a significant position in Rentokil and that it is currently a top 10 shareholder, adding that it reached out to the company to discuss ideas and initiatives to improve shareholder value.
In response, shares in Rentokil soared 12% to 465.01 pence in London on Wednesday morning.
Analysts at Citi said although Trian has not yet set out any plans for its investment, "we think it is possible that they ask for a relisting of Rentokil in the US given the valuation gap with its rival pest operator Rollins Inc."
Citi retains a 'buy' rating on Rentokil.
AJ Bell's Investment Director Russ Mould agrees.
"Given Rentokil does a large chunk of its business across the Atlantic this could include a push to shift its primary listing to the US, which would be another blow to the prestige of London as a listing venue. Trian pursued a similar approach with Ferguson which made the move in 2022."
In 2019, Trian took a 6% stake in plumbing specialist Ferguson PLC noting it was trading at a discount to peers in the US.
Ferguson, formerly known as Wolseley, moved its primary stock market listing to New York in 2022.
In a more high profile move, Trian agitated for change at Walt Disney Co but was ultimately defeated.
In April, Disney declared victory over the activist investor who had sought to overhaul its board.
The Burbank, California-based media company said Disney's full slate of 12 directors has been elected by a "substantial margin" over the nominees of Trian.
Peltz had blasted the Disney board over botched leadership planning after the entertainment company reinstated long-running chief Bob Iger as chief executive and ousted Iger's successor.
Peltz nominated himself and former Disney chief financial officer Jay Rasulo to the board – an outcome that Disney fought vigorously.
"The root cause of Disney's underperformance... is a board that is too closely connected to a long-tenured CEO and too disconnected from shareholder interests," Trian said in December.
AJ Bell's Mould quipped: "Having failed to catch a mouse at Disney, Nelson Peltz is now chasing rats at Rentokil."
"Now a top 10 shareholder in the firm, Peltz is likely to pursue a big shake-up of a company which has struggled in comparison with its US peer Rollins, both in share price terms and financial performance," he added.
In March, Rentokil outlined a new strategic vision for the US.
Called 'The Right Way 2 Plan', Rentokil said the strategy was aimed at reinvigorating organic growth in North America.
In December 2021, Rentokil bought Terminix, a market leader in termite control in North America, in a USD6.7 billion deal that created the biggest pest control provider in the world.
By Jeremy Cutler, Alliance News reporter
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