(Adds details, background, context)
Dec 16 Britain's Rentokil Initial Plc
will combine parts of its workwear and hygiene units with those
of Haniel, a family-owned German firm, to create a leading
European provider with combined revenue of about 1.1 billion
euros, the firms said.
Support services firm Rentokil said it would transfer its
workwear and hygiene operations in 10 countries across the
Benelux and Central and Eastern Europe regions to Haniel's
CWS-boco brand, which operates in 17 countries.
Rentokil, which also provides pest control services, said it
would receive around 520 million euros ($543 million) in cash
and a stake of about 18 percent in the joint venture.
The valuation of Rentokil's businesses being transferred
reflected a multiple of 15.2 times core earnings (Adjusted
profit before tax, interest and amortisation or APBITA) over the
year to June 30, the company said.
Rentokil has been focused on growing its pest control and
hygiene businesses through international deals since
restructuring its management and core businesses in 2013. Over
the nine months to Sept. 30, Rentokil has bought 33 businesses
with combined annual revenue of 109 million pounds.
With over 90 percent of its revenue now coming from outside
the UK, Rentokil's overseas expansion has shielded it against a
slowdown in decision making by domestic customers since
Britain's vote to leave the EU, which has forced support
services peers Capita and Mitie to issue
Rentokil expects the post-Brexit pound slide to boost
its annual profits, even as its organic revenue growth
accelerated over the third quarter partly due to improvements in
its hygiene business and less challenging conditions in its
Rentokil said on Friday it would also receive an annual
fixed dividend of 19 million euros from the joint venture for
five years, adding that it would use deal proceeds to reduce
debt and pursue acquisitions in its pest control and hygiene
The company raised its 2017 guidance for expenditure on
bolt-on acquisitions to 100 million pounds.
Haniel, which holds investments in companies including
German retailer Metro, said separately the deal would
allow CWS-boco to continue its development in attractive markets
for workwear, cleanroom and hygiene services.
Haniel said it expected the process of establishing the
joint venture to be completed by the middle of 2017.
CWS-boco posted revenue of 393 million pounds for the six
months ended June 30, accounting for about 22 percent of
Haniel's half-year revenue.
($1 = 0.9576 euros)
(Reporting by Esha Vaish in Bengaluru; Editing by Sunil Nair
and Gopakumar Warrier)