Rentokil Initial is to buy US pest control business Terminix in a $6.7 billion deal.
The transaction will bring the two businesses together to create the “global leader” in pest control with the two companies having an estimated combined pro forma revenue of around $5.7 billion last year. Under the deal, Rentokil Initial will acquire Terminix for stock and cash.
The combined group, to be based in the UK, is expected to create increased scale in the global pest control market, substantially increased scale in North America, and provide an enlarged platform for profitable growth.
It is also expected to generate material annual pre-tax net cost synergies of at least US$150 million by the third full-year post-completion.
A statement said: “The enlarged business will have a strong platform for growth, particularly in North America, and an attractive financial profile to support future growth, including through acquisitions and continued investment in innovation and technology.”
Andy Ransom, CEO of Rentokil Initial, said: “This is an exciting and transformational combination that will create the global leader in commercial, residential and termite pest control, and a leader in North America, the world’s largest pest control market. It brings together circa 56,000 colleagues, protecting people, enhancing lives in over 87 countries, and serving circa 4.9 million customers.”
The boards of directors of both Terminix and Rentokil Initial have unanimously approved the transaction and resolved to recommend that their respective shareholders vote in favour of it.
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