Rentokil Initial, a FTSE 100 pest-control empire owned by Rentokil Initial’s former boss at BT, is being targeted for a takeover bid backed by private equity.
Philip Jansen has been in discussions with private equity firms about a plan to install him as the executive chairman of a faltering company. The company issued a profit warning in October last year and activist investor Nelson Peltz disclosed a position last month as a top ten investor.
Rentokil has been struggling since the $6.7 billion purchase of American competitor Terminix in 2022. The combined company had a 30% market share within the US, but the deal led to problems with integration. For example, Rentokil drivers were duplicating routes when they carried out extermination. Jansen’s prospective investors would then try to improve integration, and use Rentokil to consolidate more pest control businesses in America. They may eventually try to relist it in America, where similar businesses are valued at much higher levels.
If a standard premium of 30% is applied, the price of the Rentokil purchase would be around PS15 billion. This makes it the largest merger and acquisition in recent years, which has targeted companies such as Hargreaves Lansdown Darktrace, and Britvic. This deal would likely require several private equity investors to be involved.
Jansen has a close relationship with Bain Capital. He ran the food wholesaler Brakes between 2010 and 2013, which is a firm that Jansen knows well. Then he ran Worldpay, a payments processing company that was purchased from Royal Bank of Scotland and floated by Bain and Advent International in 2015. CVC is believed to be one of the private equity firms that are looking at Rentokil. However, it’s not clear if this is part of Jansen’s consortium.
Rentokil, Bain, CVC and Jansen declined to comment.
Rentokil was founded in Crawley in West Sussex in 1925. Since Andy Ransom became chief executive of the company in 2013, Rentokil’s share price has nearly tripled. Rentokil’s share price has almost tripled since Andy Ransom became chief executive in 2013. He spun off businesses such as security and catering, and focused the company on its higher margin pest control business. More than 200 acquisitions were made. Rentokil’s announcement in October that it was hit by a “softer” US demand, which included wholesale customers like smaller pest control operators and landscape companies who buy its chemicals, scared the market.
Rentokil’s shares tripled in value under Andy Ransom, chief executive officer
In its first-quarter results for April, the company reported that American revenues were up only 1.5%, while Rollins’ closest competitor, Rollins, had reported growth of around 8%. Rentokil is valued at about 18 times the price of Rollins.
Rentokil’s problems are not unique to Jansen or private equity.
Last month, representatives of Peltz’s Trian Partners Fund met with the management team. Rentokil was advised to concentrate its efforts in America and possibly move its listing to America, like other FTSE 100 firms such as Paddy Power’s owner Flutter. They encouraged the company to leave markets where it was underperforming. Rentokil is currently active in over 90 countries.
Trian also lobbied to get a board position and for a new chief executive.
Jansen’s involvement in a FTSE 100 acquisition would be a dramatic comeback for the 57-year-old, who retired from BT earlier this year. Jansen accelerated BT’s installation of superfast broadband, but suffered a drop in the share prices and a reshuffle on the shareholding registry. French-Israeli tycoon Patrick Drahi acquired a large stake.
Jansen took a break after handing the BT CEO position to Allison Kirkby. Kirkby was previously a BT Non-Executive. He has a diverse career and has moved between different sectors. He was the chief operating officer of Sodexo before joining Brakes. Rentokil’s board includes Sodexo’s head of America.
Harold Maxwell Lefroy invents a formula for killing beetles that burrow into Parliament’s estate. Rentokil becomes a registered company in the year following.
Rentokil is listed on the London Stock Exchange in 1969
1983 Clive Thompson is appointed chief executive, ushering in an era of acquisitions. He is soon called “Mr. 20%” because of the company’s explosive growth.
2004 Rentokil issues a profit warning, and Thompson is removed in a coup led by Brian McGowan.
Andy Ransom becomes CEO and begins selling pieces of the company’s portfolio.
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