Rentokil Initial Sells France Workwear Business for €410m
Why we think this is good
The sale of the France Workwear business is a positive strategic move for Rentokil Initial, as it allows the company to focus more on its core Pest Control and Hygiene & Wellbeing segments, which are larger and higher-growth markets. The transaction values the business at a fair price, with the inclusion of an earn-out mechanism, and will enhance the Group's capital efficiency through reduced capital expenditure and improved cash flow. Overall, this is a good outcome for the company and its shareholders.
Key Points
- Rentokil Initial to sell France Workwear business to H.I.G. Capital for €410m gross enterprise value
- Total net cash proceeds expected to be approximately €370m
- Sale positions Rentokil as a streamlined Pest and Hygiene & Wellbeing business
- Transaction will enhance capital efficiency through reduced CAPEX and improved cash flow
Summary
Rentokil Initial has announced the sale of its France Workwear business to H.I.G. Capital for a gross enterprise value of approximately €410m (c.$465m) on a cash-free debt-free basis, including an earn-out mechanism with a maximum value of €30m (c.$34m). The total net cash proceeds are expected to be approximately €370m (c.$420m), subject to customary closing adjustments and the final earn-out outcome. The sale positions Rentokil Initial more clearly as a streamlined Pest and Hygiene & Wellbeing business, enabling the Group to effectively concentrate resources to better capitalize on the large, attractive long-term growth markets within these core areas. The transaction will also enhance the Group's capital efficiency through a meaningful reduction in capital expenditure requirements and improved cash flow.