(Adds detail on deal, shares, background)
Dec 14 (Reuters) - Rentokil has agreed to buy
U.S.-based rival Terminix Global in a $6.7 billion deal,
scaling up the British company's pest control business in North
America and boosting its expertise in termite and residential
services.
Rentokil shares hit a record high after the announcement,
climbing as much as 6%.
The cash-and-stock deal involves about 643.29 million new
Rentokil shares to be issued to Terminix shareholders and about
$1.3 billion in cash.
The deal implies a value of $55 per Terminix share,
representing a 47% premium to Monday's close. Terminix's
shareholders will own about 26% of the enlarged group.
The enlarged group will serve about 4.9 million customers
around the world from 790 locations and employ about 56,000
people, the companies said.
Rentokil's Chairman Richard Solomons and Chief Executive
Andy Ransom will hold those same roles in the combined group.
The boards of both companies backed the deal, which is
expected to close in the second half of 2022.
"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," Ransom said in a joint statement.
Rentokil expects the deal to generate cost savings of at
least $150 million by the third year after the close and add to
its earnings in the first year.
The London-listed company said it would list the American
Depository Receipts on the New York Stock Exchange.
Rentokil set up a debt facility for up to $2.7 billion with
Barclays to finance the cash component of the deal and refinance
Terminix's debt.
Barclays and Goldman Sachs were joint financial advisers to
Rentokil, while Lazard is acting as financial advisor to
Terminix.
(Reporting by Sinchita Mitra and Yadarisa Shabong in Bengaluru;
Editing by Devika Syamnath and Edmund Blair)