TIDMRTO
RNS Number : 7139J
Rentokil Initial PLC
30 June 2017
30 June 2017
COMPLETION OF RENTOKIL INITIAL JOINT VENTURE WITH HANIEL
Redeploying proceeds into higher growth markets - Pest Control
and Hygiene
Rentokil Initial plc (FTSE: RTO, "the Company") and Franz Haniel
& Cie. GmbH ("Haniel") are delighted to announce the completion
of their agreement, announced on 16 December 2016, to form a joint
venture ("the JV"), which will become a leading provider of
Workwear and Hygiene services in Europe.
The JV brings together Rentokil Initial's Workwear and Hygiene
businesses ("the Rentokil Initial businesses") in 10 countries
principally in the Benelux and Central Europe regions with Haniel's
businesses in 16 countries which operate under the CWS-boco brand.
In the 12 months to 30 June 2016, the JV had combined revenues of
c. EUR1.1bn and APBITA of over EUR130m.
Key points:
-- On 7 June 2017, the European Commission cleared the formation
of the joint venture under the EC Merger Regulation
unconditionally.
-- As a consequence of completion, the Rentokil Initial
businesses (c. 2,500 people) have transferred into CWS-boco, a
company owned by Haniel. The Rentokil Initial businesses transfer
at a multiple of 15.2x APBITA (12 months to 30 June 2016).
-- In consideration for the transfer, the Company receives:
o c. EUR520m in cash, subject to completion adjustments;
o A c. 18% stake in the JV; and
o An annual dividend of EUR19m for five years, with the first
payment in H1 2018.
-- The Company's pro forma net debt: EBITDA ratio (as at 31
December 2016) is reduced from 2.5x to 2.0x as a consequence of
completion, with annual interest costs reduced by c. GBP7m p.a.,
providing increased flexibility for acquisitions in Pest Control
and Hygiene.
-- Following completion, the percentage of the Company's
revenues from its Growth and Emerging markets is 80%, with Pest
Control accounting for 60% and Hygiene accounting for 20%.
-- In addition, under the terms of the agreement, the Company
has acquired the EUR45m CWS-boco Hygiene business in Italy, but not
in Ireland.
The Company's stake in the JV ensures its continued exposure to
the combined businesses' profit growth potential, which the
Company's management believes is strengthened by the complementary
nature of the businesses' operations, products and capabilities as
well as the anticipated synergies and efficiencies. As previously
stated, the Company expects to maintain its stake in the JV for a
minimum of three years and has various contractual exit options to
optimise value for shareholders further.
Andy Ransom, Chief Executive of Rentokil Initial, commented:
"We are delighted that the joint venture has completed on
schedule. The deal aligns with our value-creating capital
allocation model perfectly, as not only does it increase our
ability to invest in our core growth categories of Pest Control and
Hygiene, but it also protects value through an investment in a
leading European Workwear and Hygiene business. It represents a
step change in the execution of our strategy with 80% of group
revenues now coming from Pest Control and Hygiene services."
Stephan Gemkow, Chief Executive of Haniel, commented:
"This joint venture represents yet another success for us as a
family equity company using a buy and build strategy to increase
the divisions' growth and profitability. CWS-boco and Initial are
combining their strengths to continue their outstanding performance
in the attractive market for workwear, cleanroom and hygiene
services. At the same time, this enables us to strengthen our
diversified portfolio's future viability."
Rentokil Initial will announce its Interim Financial Results for
the six months to 30 June 2017 on Thursday 27 July and will provide
further information about the transaction at that time.
ENDS
Notes to editors:
Rentokil Initial
Rentokil Initial is one of the largest business services
companies in the world, operating in over 65 countries and
employing 35,500 colleagues. The Company offers route-based
services, primarily in Pest Control and Hygiene services through
teams of local experts. For more information, visit
www.rentokil-initial.com.
The Rentokil Initial Workwear and Hygiene businesses in the
JV:
-- Belgium, Netherlands, Luxembourg, Germany, Austria,
Switzerland, Czech Republic, Slovakia, Poland and Sweden.
The JV does not include:
-- Pest Control, Plants, Specialist Hygiene, Premium Scenting,
Medical, Dental and other operations in the above countries.
-- All businesses in France, Italy and Ireland.
-- All businesses outside of continental Europe.
Haniel & Cie. GmbH
Franz Haniel & Cie. GmbH is a German family equity company
which has been headquartered in Duisburg-Ruhrort since it was
founded in 1756. It is from there that the holding company, which
is wholly owned by the family, manages a diversified portfolio in
line with a long-term investment strategy as a value developer.
Haniel's portfolio currently includes four business divisions which
are independently responsible for their own operating business and
which hold a leading market position in their respective sectors:
BekaertDeslee, CWS-boco and ELG (wholly owned), TAKKT (majority
owned). In addition there is the METRO GROUP financial investment.
For more information, visit www.haniel.com.
CWS-boco
CWS-boco International GmbH is one of the leading international
providers of professional textile services and washroom hygiene
solutions. This includes the well-known CWS cotton towel, soap and
fragrance dispensers and dust control mats, as well as industrially
washable workwear and business wear, customer-specific corporate
fashion collections, and protective clothing from boco.
Further information can be found at: www.cws-boco.com.
The Haniel Workwear and Hygiene businesses in the JV:
-- Belgium, Netherlands, Luxembourg, Germany, Austria,
Switzerland, Czech Republic, Slovakia, Poland, Sweden, Bulgaria,
Ireland, Croatia, Hungary, Romania and Slovenia.
Enquiries:
Investors / Analysts: Katharine Rycroft Rentokil Initial plc 07811 270734
Media: Malcolm Padley Rentokil Initial plc 07788 978 199
Ben Woodford/Sam Cartwright Bell Pottinger 0203 772 2588
Dietmar Bochert Haniel +49 203 806-578
Talar Arzuyan-Kadoglou CWS-boco +49 6103 309-1032
This information is provided by RNS
The company news service from the London Stock Exchange
END
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