Rentokil may be next to nibble at US listing
19/10/2023 11:44
(The author is a Reuters Breakingviews columnist. The opinions
expressed are their own.)
LONDON, Oct 19 (Reuters Breakingviews) - Rentokil
RTO.L is an obvious contender to ditch its London listing in
favour of the U.S. The $15 billion pest control company’s shares
fell as much as 16% on Thursday after it revealed that revenue
from exterminating bed bugs and vermin was waning in the U.S.
market, which rose just 2.2% in the third quarter, a steep
decline from the first half, when it delivered 4.1% growth. CEO
Andy Ransom said that it is getting harder to win new business
due to “the macroeconomic backdrop”.
Fixing its issues in the U.S. will be tricky. Ransom
splurged $6.7 billion on Terminix last year, and U.S. revenue
now accounts for over half of Rentokil’s total sales, making it
the country’s largest pest control company. But it is facing a
fierce competitor in $18 billion U.S. rival Rollins ROL.N ,
which has delivered double-digit revenue growth over the past
two years. Rollins is valued on nearly 38 times its forward
earnings, versus Rentokil which was trading on just 23 times
before Thursday’s fall, according to LSEG data. With Rentokil
shareholders a little ratty, Ransom may come under more pressure
to consider ways of pepping up the stock, like ditching London
in favour of the more highly valued U.S. market. (By Aimee
Donnellan)
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(Editing by Neil Unmack and Oliver Taslic)
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