REG - Rentokil Initial PLC - Update on Terminix acquisition

Rentokil InitialAnnouncement

15/03/2022 07:00

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RNS Number : 7515E  Rentokil Initial PLC  15 March 2022

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AND THE PERSON RESPONSIBLE FOR
MAKING THIS ANNOUNCEMENT IS DARAGH FAGAN, GENERAL GROUP COUNSEL AND COMPANY
SECRETARY, RENTOKIL INITIAL PLC.

 

Rentokil Initial plc

 

15 March 2022

 

Update on the acquisition of Terminix Global Holdings, Inc: Hart-Scott-Rodino
waiting period expires

 

With respect to the definitive agreement (the "Agreement") under which
Rentokil Initial plc (the "Company") will acquire Terminix Global Holdings,
Inc ("Terminix") for stock and cash (the "Combination" or the "Transaction"),
announced on 14 December 2021, the Company and Terminix today announce that
with effect from the close of business on 14 March 2022, the applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
has now expired, thereby completing the necessary antitrust process in the US
and satisfying one of the principal conditions to completion of the
Transaction.

 

The Transaction will bring together two complementary businesses (the
"Combined Group") to create the global leader in pest control and hygiene
& wellbeing, and the leader in the pest control business in North America,
the world's largest pest control market. The Transaction will combine two
leading brands with a long cultural heritage, outstanding talent and strong
focus on people, customers and ESG.  Upon completion, the Combined Group will
have c.56,000 colleagues serving c.4.9m customers around the world from 790
locations.  The enlarged business will have a strong platform for growth,
particularly in North America, and an attractive financial profile to support
future growth, including through acquisitions and continued investment in
innovation and technology.  For the year ended 31 December 2021, the Combined
Group's illustrative revenue would have amounted to US$6.0bn 1  (#_ftn1)
(£4.5bn), with EBITDA of US$1.3bn (£1.0bn) and Free Cash Flow of US$0.7bn
(£0.5bn).

 

The Combination is expected to create significant value, enhance long-term
growth potential, be highly cash generative and present a compelling
industrial logic, supported by:

 ■    increased scale and leadership in the global pest control market;
 ■    substantially increased scale in North America, providing an enlarged platform
      for profitable growth;
 ■    a complementary and synergistic portfolio combination; and
 ■    an attractive financial profile.

 

A number of other conditions to the Agreement remain to be satisfied and these
are being actively progressed by the Company and Terminix. Those conditions
include, inter alia, obtaining the approval by the Company's and Terminix's
shareholders of the Combination, and for the registration of the Company ADSs
and their listing on the New York Stock Exchange.

 

The Company is pleased with the progress being made in order to satisfy the
remaining conditions, and the parties are now targetting the Combination
closing towards the end of the third quarter of 2022. In order to provide
additional certainty for the parties regarding the timing of the necessary
steps to completion, including allowing sufficient time for the SEC and FCA to
review and approve the necessary documentation for submission to shareholders
and registration of the Company ADSs, the Company and Terminix have amended
the End Date (as defined in the Agreement) from 13 September 2022 to 31
December 2022. Accordingly, the parties remain on track for closing to take
place within H2 2022.

 

 

Enquiries:

 

 Investors / Analysts:  Katharine Rycroft  Rentokil Initial plc  +44 (0)7811 270734
 Media:                 Malcolm Padley     Rentokil Initial plc  +44 (0)7788 978199

                        Richard Mountain   FTI Consulting        +44 (0)7909 684466

 

 

About Rentokil Initial:

 

Founded in 1925, Rentokil Initial is a leader in the pest control and hygiene
& wellbeing service industry.  The Company has c.46,000 employees, and
over 1,800 local service teams across the world covering around 90% of global
GDP in over 90 of the world's 100 largest cities across the US, Europe, UK,
Asia, Pacific and Rest of World.  It operates in 88 countries. The Company's
business model is focused on compounding revenue, profit and cash growth
through a combination of organic growth and M&A.

 

About Terminix:

 

Terminix Global Holdings (NYSE: TMX) is a leading provider of residential and
commercial pest management. The Company provides pest management services and
protection against termites, mosquitoes, rodents and other pests.
Headquartered in Memphis, Tenn., with more than 11,700 teammates and 2.9
million customers, the Company visits more than 50,000 homes and businesses
every day. It has scale and deep presence in the U.S. with over 93% of
revenues coming from the United States.  During 2021, Terminix generated a
total revenue of US$2.045bn, adjusted EBITDA of US$387m and profit from
continuing operations before income taxes of US$180m. As of December 31, 2021,
Terminix had gross assets of US$4.41bn. Terminix's executive and senior
leaders are Brett Ponton (Chief Executive Officer), Robert Riesbeck (Executive
Vice President and Chief Financial Officer), David Dart (Chief Human Resources
Officer),  Doug Hart (Vice President, Terminix International), Dion Persson
(Senior Vice President, Strategy and M&A), Deidre Richardson (Senior Vice
President, General Counsel and Corporate Secretary), Jim Summerville (Senior
Vice President, Supply Management) and Joy Wald (Senior Vice President and
Chief Information Officer).

 

Additional Information About The Proposed Transaction And Where To Find It

 

In connection with the proposed transaction between Rentokil Initial plc
("Rentokil") and Terminix Global Holdings, Inc. ("Terminix"), Rentokil will
file with the U.S. Securities and Exchange Commission (the "SEC") a
registration statement on Form F-4, which will include a proxy statement of
Terminix that also constitutes a prospectus of Rentokil. Each of Rentokil and
Terminix will also file other relevant documents in connection with the
proposed transaction. The definitive proxy statement/prospectus will be sent
to the shareholders of Terminix. Rentokil will also file a shareholder proxy
circular in connection with the proposed transaction with applicable
securities regulators in the United Kingdom and the shareholder proxy circular
will be sent to Rentokil's shareholders. This communication is not a
substitute for any registration statement, proxy statement/prospectus or other
documents Rentokil and/or Terminix may file with the SEC in connection with
the proposed transaction. BEFORE MAKING ANY VOTING OR INVESTMENT DECISIONS,
INVESTORS, STOCKHOLDERS AND SHAREHOLDERS OF TERMINIX AND RENTOKIL ARE URGED TO
READ CAREFULLY AND IN THEIR ENTIRETY THE PROXY STATEMENT/PROSPECTUS AND
SHAREHOLDER PROXY CIRCULAR, AS APPLICABLE, AND ANY OTHER RELEVANT DOCUMENTS
THAT ARE FILED OR WILL BE FILED WITH THE SEC OR APPLICABLE SECURITIES
REGULATORS IN THE UNITED KINGDOM, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO
THESE DOCUMENTS, IN CONNECTION WITH THE PROPOSED TRANSACTION WHEN THEY BECOME
AVAILABLE, AS THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT
TERMINIX, RENTOKIL, THE PROPOSED TRANSACTION AND RELATED MATTERS. The
registration statement and proxy statement/prospectus and other documents
filed by Rentokil and Terminix with the SEC, when filed, will be available
free of charge at the SEC's website at www.sec.gov. In addition, investors and
shareholders will be able to obtain free copies of the proxy
statement/prospectus and other documents filed with the SEC by Terminix online
at investors.terminix.com, upon written request delivered to Terminix at 150
Peabody Pl., Memphis, TN 38103, USA, Attention: Corporate Secretary, or by
calling Terminix's Corporate Secretary's Office by telephone at +1
901-597-1400 or by email at deidre.richardson@terminix.com, and will be able
to obtain free copies of the registration statement, proxy
statement/prospectus, shareholder proxy circular and other documents which
will be filed with the SEC and applicable securities regulators in the United
Kingdom by Rentokil online at https://www.rentokil-initial.com, upon written
request delivered to Rentokil at Compass House, Manor Royal, Crawley, West
Sussex, RH10 9PY, England, Attention: Katharine Rycroft, or by calling
Rentokil by telephone at +44 (0) 7811 270734 or by email at
katharine.rycroft@rentokil-initial.com.  The information included on, or
accessible through, Rentokil's or Terminix's website is not incorporated by
reference into this communication.

This communication is for informational purposes only and is not intended to,
and shall not, constitute an offer to sell or buy or the solicitation of an
offer to sell or buy any securities, nor shall there be any sale of securities
in any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to appropriate registration or qualification under the
securities laws of any such jurisdiction.  No offering of securities shall be
made except by means of a prospectus meeting the requirements of Section 10 of
the U.S. Securities Act of 1933, as amended.

Participants in the Solicitation of Proxies

This communication is not a solicitation of proxies in connection with the
proposed transaction.  However, under SEC rules, Terminix, Rentokil, and
certain of their respective directors, executive officers and other members of
the management and employees may be deemed to be participants in the
solicitation of proxies in connection with the proposed transaction.
Information about Terminix's directors and executive officers may be found on
its website at corporate.terminix.com/responsibility/corporate-governance and
in its 2021 Annual Report on Form 10-K filed with the SEC on March 1, 2022,
available at investors.terminix.com and www.sec.gov.  Information about
Rentokil's directors and executive officers may be found on its website at
https://www.rentokil-initial.com and in its 2020 Annual Report filed with
applicable securities regulators in the United Kingdom on March 31, 2021,
available on its website at https://www.rentokil-initial.com.  The
information included on, or accessible through, Rentokil's or Terminix's
website is not incorporated by reference into this communication.  These
documents can be obtained free of charge from the sources indicated above.
Additional information regarding the interests of such potential participants
in the solicitation of proxies in connection with the proposed transaction
will be included in the proxy statement/prospectus and shareholder proxy
circular and other relevant materials filed with the SEC and applicable
securities regulators in the United Kingdom when they become available.

Information Regarding Forward-Looking Statements

This communication contains forward-looking statements as that term is defined
in Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended by the Private Securities
Litigation Reform Act of 1995. Forward-looking statements can sometimes be
identified by the use of forward-looking terms such as "believes," "expects,"
"may," "will," "shall," "should," "would," "could," "potential," "seeks,"
"aims," "projects," "predicts," "is optimistic," "intends," "plans,"
"estimates," "targets," "anticipates," "continues" or other comparable terms
or negatives of these terms, but not all forward-looking statements include
such identifying words.  Forward-looking statements are based upon current
plans, estimates and expectations that are subject to risks, uncertainties and
assumptions.  Should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results may vary
materially from those indicated or anticipated by such forward-looking
statements.  We can give no assurance that such plans, estimates or
expectations will be achieved and therefore, actual results may differ
materially from any plans, estimates or expectations in such forward-looking
statements.  Important factors that could cause actual results to differ
materially from such plans, estimates or expectations include: a condition to
the closing of the proposed transaction may not be satisfied; the occurrence
of any event that can give rise to termination of the proposed transaction;
Rentokil is unable to achieve the synergies and value creation contemplated by
the proposed transaction; Rentokil is unable to promptly and effectively
integrate Terminix's businesses; management's time and attention is diverted
on transaction related issues; disruption from the proposed transaction makes
it more difficult to maintain business, contractual and operational
relationships; the credit ratings of Rentokil declines following the proposed
transaction; legal proceedings are instituted against Terminix or Rentokil;
Terminix or Rentokil is unable to retain or hire key personnel; the
announcement or the consummation of the proposed acquisition has a negative
effect on the market price of the capital stock of Terminix or Rentokil or on
Terminix's or Rentokil's operating results; evolving legal, regulatory and tax
regimes; changes in economic, financial, political and regulatory conditions,
in the United Kingdom, the United States and elsewhere, and other factors that
contribute to uncertainty and volatility, natural and man-made disasters,
civil unrest, pandemics (e.g., the coronavirus (COVID-19) pandemic (the
"COVID-19 pandemic")), geopolitical uncertainty, and conditions that may
result from legislative, regulatory, trade and policy changes associated with
the current or subsequent U.S. or U.K. administration; the ability of Rentokil
or Terminix to successfully recover from a disaster or other business
continuity problem due to a hurricane, flood, earthquake, terrorist attack,
war, pandemic, security breach, cyber-attack, power loss, telecommunications
failure or other natural or man-made event, including the ability to function
remotely during long-term disruptions such as the COVID-19 pandemic; the
impact of public health crises, such as pandemics (including the COVID-19
pandemic) and epidemics and any related company or governmental policies and
actions to protect the health and safety of individuals or governmental
policies or actions to maintain the functioning of national or global
economies and markets, including any quarantine, "shelter in place," "stay at
home," workforce reduction, social distancing, shut down or similar actions
and policies; actions by third parties, including government agencies; the
risk that disruptions from the proposed transaction will harm Rentokil's or
Terminix's business, including current plans and operations; certain
restrictions during the pendency of the acquisition that may impact Rentokil's
or Terminix's ability to pursue certain business opportunities or strategic
transactions; Rentokil's or Terminix's ability to meet expectations regarding
the accounting and tax treatments of the proposed transaction; the risks and
uncertainties discussed in the "Risks and Uncertainties" section in Rentokil's
reports available on the National Storage Mechanism at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism and on its website at
https://www.rentokil-initial.com; and the risks and uncertainties discussed in
the "Risk Factors" and "Information Regarding Forward-Looking Statements"
sections in Terminix's reports filed with the SEC. These risks, as well as
other risks associated with the proposed transaction, will be more fully
discussed in the proxy statement/prospectus and shareholder proxy circular.
While the list of factors presented here is, and the list of factors to be
presented in proxy statement/prospectus and shareholder proxy circular will
be, considered representative, no such list should be considered to be a
complete statement of all potential risks and uncertainties. Unlisted factors
may present significant additional obstacles to the realization of
forward-looking statements. We caution you not to place undue reliance on any
of these forward-looking statements as they are not guarantees of future
performance or outcomes and that actual performance and outcomes, including,
without limitation, our actual results of operations, financial condition and
liquidity, and the development of new markets or market segments in which we
operate, may differ materially from those made in or suggested by the
forward-looking statements contained in this communication.  Except as
required by law, neither Rentokil nor Terminix assumes any obligation to
update or revise the information contained herein, which speaks only as of the
date hereof.

 1  (#_ftnref1) GBP/USD rate of 1.3273 as per 10 December 2021 used to form
Combined Group financials. Illustrative combined financials have been
calculated using Terminix's financial results in accordance with US GAAP and
Rentokil Initial's results in accordance with IFRS. The unaudited combined pro
forma financial information is for information purposes only and is not
intended to represent or be indicative of Rentokil Initial's or Terminix's
financial position or results of operations that Rentokil Initial or Terminix
would have reported had the pro forma adjustments not been made and is not
necessarily indicative of Rentokil Initial's or Terminix's future financial
position or results of operations.

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