Rentokil Initial Regulatory News (RTO)

24 Jan 2006 07:01

Rentokil Initial PLC24 January 2006 24 January 2006 RENTOKIL INITIAL TO ACQUIRE US PEST CONTROL COMPANY Rentokil Initial plc announces that it has entered into an agreement to acquireJ.C. Ehrlich Co. Inc. ("Ehrlich") for a consideration of US$141.8 million (£80.1million). Ehrlich is the largest independently-owned pest control company inthe US and the fourth largest pest control company in the US overall. Thetransaction will be financed from available cash resources. Pest Control is one of Rentokil Initial's main business drivers, along withWashrooms and Textiles, for the creation of sustainable, profitable growth.Rentokil Initial is already the European market leader in pest control and hasstrong market positions in Asia Pacific and South Africa. The proposedacquisition of Ehrlich will significantly increase the company's scale in theattractive North American market, where Rentokil's existing operations have beengrowing strongly. Ehrlich, based in Reading, Pennsylvania, was established in 1928 by Julius C.Ehrlich and has continued to be owned and managed by the descendants of thefamily for four generations. It operates 42 branches across seven Easternstates, providing a full range of pest control services to commercial andresidential customers. In the year ended 31 December 2005, Ehrlich had revenuesof US$124.0 million (£70.0 million). Rentokil Initial's North American pest control operations, with revenues in 2005of approximately US$26.0 million (£14.7 million), are currently focused oncommercial customers in complementary geographic regions. The combined businesswill provide Rentokil Initial with a platform for further growth, building onboth companies' strong customer service ethos and technological innovation. Victor Hammel, currently President of Ehrlich, will assume the role of CEO ofthe combined pest control operations which will be based at Ehrlich's existingheadquarters in Reading, Pennsylvania. Kevin Ward, current President ofRentokil's pest control operations in North America, will join the combinedorganisation's senior management team. The agreement is subject to customary closing conditions including confirmationof the financial results of Ehrlich for the year ending 31 December 2005 and onthe expiry of the waiting period under the Hart Scott Rodino AntitrustImprovements Act of 1976. Completion of the acquisition is expected before theend of the first quarter. Cont./ Doug Flynn, Chief Executive of Rentokil Initial, said: "We are delighted to announce the proposed acquisition of Ehrlich which has anexcellent reputation and a strong market position in the growing US pest controlindustry. This transaction is a major development in our global pest controlstrategy and significantly improves our scale and opportunity in this attractivemarket. Ehrlich brings us a substantial business with a strong customer service culture.Both Ehrlich and our own US businesses are well managed and have shown solidgrowth over the last few years. When combined they will create a strongplatform from which to develop an expanded position in the US pest controlmarket." Victor Hammel, current President of Ehrlich and CEO designate for the combinedpest control operation, said: "Our relationship with Rentokil Initial will be beneficial for both companies.Rentokil Initial has a reputation for quality that is very similar to ours andwe believe there is a great deal we can learn from each other. Over the nextfew months, we will consider how to meld the best practices from eachorganization so we can better serve our residential and commercial customers." Co-owner of Ehrlich, Bobby Hammel said: "We chose Rentokil Initial because they respected the culture we have cultivatedover the past 78 years. The future well-being of our co-workers is of theutmost importance to us, and we feel that this expanded organization will offerthem many new opportunities." Enquiries: Rentokil Initial plc, Tel. +44 (0)1342 833022Mark Boyle, Group Strategy & Development DirectorCharles Grimaldi, Corporate Affairs Director Brunswick Group LLP, Tel. +44 (0) 20 7404 5959John SunnucksGill Ackers Notes to editors: Rentokil Initial is one of the largest business services companies in the world,operating in all the major economies of Europe, North America, Asia Pacific andAfrica. The company has some 90,000 employees providing a range of supportservices in over 40 countries where the 'Rentokil' and 'Initial' brands havecome to represent innovation, deep expertise and consistent quality of service.Services include pest control, tropical plants, hygiene services, facilitiesservices, electronic security and parcels delivery. Rentokil Initial plc, Felcourt, East Grinstead, West Sussex RH19 2JY This information is provided by RNS The company news service from the London Stock Exchange