Rentokil Initial to acquire Terminex in stock and cash deal

Rentokil said on Tuesday that it will issue to Terminix shareholders approximately 643.29m new Rentokil Initial shares and around US$1.3bn in cash in order to satisfy the transaction, implying a value of $55.0 per share of Terminix common stock - a premium of 47.0% over the shares' closing price on 13 December.

The FTSE 100-listed group highlighted that the acquisition of Terminex, formerly part of Mitie Pest Control, would combine "two leading brands", with the enlarged company having "a strong platform for growth", particularly in North America, and "an attractive financial profile to support future growth".

Rentokil added that the acquisition was expected to generate "material annual pre-tax net cost synergies" of at least $150.0m by the third full year post-completion, with run-rate synergies expected to accumulate approximately 30%, 80% and 100% in the first, second and third 12-month periods post-completion, respectively. However, in order to achieve these synergies, Rentokil cautioned that it expects to incur aggregate cash implementation costs of approximately $150m, half of which would be in the first 12 months post-completion.

The acquisition was also forecast to deliver "mid-teens percent accretion" to earnings per share in its first full year.