Episode 61

Dec. 15, 2021

Topic: Rentokil Buys Terminix: The Deal of the Century and What It Means to You

Guest: Donnie Shelton and Dan Gordon

Click here to listen.

In this episode we discuss:

• Rentokil's $6.7 billion acquisition of Terminix

• How the deal equates to about a 3.6 multiple of revenue

• How the new combined company will likely have to divest certain markets for antitrust purposes

• Rentokil's estimated cost synergies of $150 million per year by year three, and where those will likely come from

• What the combined entity's estimated market share will be (about one-third of the market)

• What the massive new company may mean for Rollins, which will no longer be the largest company in the pest market

• How the deal could add a strong culture and discipline to Terminix

• Is it possible for another buyer to supplant Rentokil as a buyer of Terminix at this point?

• Whether the deal opens a window for more private equity investment in the industry

• If the deal will affect M&A valuations for other operators looking to sell within the next year

• The opportunities a deal like this could present average pest control companies

• How neither Donnie nor Dan saw this coming

• What may happen five years down the road -- another firm buying Rentokil? Going private? Vertical integration?

Resources mentioned:

• News release: Acquisition of Terminix Global Holdings Inc by Rentokil Initial plc for Stock and Cash

• Rentokil-Initial website with a statement, presentation and webcast about the deal

Advice: "For me, it's change, and change always comes with opportunity ... I would be on the lookout for people, and I would be on the lookout for accounts." —Donnie Shelton

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