Rentokil acquires Terminix Global in £5bn deal as it looks to expand into US market

Rentokil will acquire Terminix Global in a £5bn deal, as it looks to swarm the US pest control market.

The cash and share deal is the company’s largest ever acquisition.

It will boost Terminix’s implied price to $55 per share – a 47 per cent premium on its last closing price.

Both boards backed the agreement unanimously, which is expected to generate material annual pre-tax synergies of at least £113m three years after the deal.

Rentokil is aiming to create the global leader in pest control and dominate North America, the world’s largest pest control market.

Terminix specialises in pest control ranging from rats and cockroaches to scorpions.

Following the deal, its shareholders will own 26 per cent of the enlarged company, which will trade in London and New York.

They can elect to receive cash or shares in the transaction.

Rentokil plans to pay 20 per cent of the overall purchase price in stock.

Upon completion, the combined group will have 56,000 employees serving 4.9m customers around the world from 790 locations. 

Rentokil believes this will provide the company with a strong platform for future growth.

Commenting on today’s announcement, Richard Solomons, chairman of Rentokil Initial, said: “We believe the combination is a compelling opportunity for all stakeholders to participate in the value creation of the combined group.”

Surprisingly, share prices have fallen over three per cent on the FTSE 100 despite the deal and Rentokil’s announced ambitions.

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