PEST CONTROL firm Rentokil Initial yesterday announced it had snapped up US firm Western Exterminator for up to $115m (£70.9m), in a move that will make it the world’s third-largest company of its kind.
The move continues Rentokil’s strategy of expanding into North America, Latin America and the Middle East. “This acquisition significantly increases Rentokil’s footprint in the world’s largest pest control market,” the firm’s chief executive Alan Brown said. He said the deal – which will give Rentokil a comprehensive US footprint – would allow the company to “compete more effectively, particularly for customers looking for nationwide coverage”.
The purchase of Western will add around $150m to Rentokil’s revenue, increasing its turnover in the US market to $420m and turning it from the world’s fifth-largest pest control firm to the third-biggest.
Over the last few years Rentokil has gradually increased its position in the US, with purchases of JC Ehrlich and Presto-X increasing its sales from the $30m they were seven years ago.
Last November Brown outlined his proposals for Rentokil’s expansion into emerging markets. Demand in the Middle East and Latin America – where the hot climates mean pests breed more – is increasing as living standards improve.
Shares in the company fell by around one per cent yesterday as analysts warned that Rentokil will have to improve Western’s performance for the deal to pay off.
“Financially the acquisition will only prove viable if Rentokil can significantly improve the profitability of the acquired business,” Seymour Pierce said.