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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

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:

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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