Rentokil’s Full Offer Price for Terminix Leaves Little Room for Slippage in Synergy Delivery

Rentokil Initial’s USD 6.7 billion bid for Terminix Global Holdings--the second largest pest control player in North America--is set to be a transformative deal which will create a clear, global market share leading player in pest control. While the deal has the support of the boards of Rentokil Initial and Terminix, the deal remains subject to shareholder approval from shareholders of both companies and U.S. anti-trust clearance. Nonetheless, we don’t see anti-trust concerns nor the necessary shareholder approvals as impediments to deal closure, and raise our fair value estimate for Rentokil Initial by 3% to GBX 535 per share, reflecting the modest shareholder value accretion we expect to eventuate from the deal. That said, the final steps could take several months to complete, so we haven’t yet incorporated the merger into our financial estimates for Rentokil.