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LOCATION: HOME > INDUSTRY > NEWS > Takeover bid for Rentokil Initial

   DATE: 30 August 2005   AUTHOR: Editor
     
 

Sir Gerry Robinson is bidding to take over the world's largest pest control firm Rentokil Initial. Raphoe Management, set up by Robinson in July last to acquire and turn around struggling businesses, said it will approach Rentokil's board with an offer.

The deal will in all probability be share and cash and sources in the know said it will be so structured to give existing Rentokil shareholders more than 90 per cent of the new company.
Following the announcement, East Grinstead-based Rentokil's shares flared up 11.2 per cent giving the company a market cap of 3 billion pounds. The company said it would consider any proposal from Raphoe, but added it is having its own recovery plans. "The board will consider any proposal that Raphoe makes in the context of the value available to shareholders from the plans that the new executive team has for the company," it said in a statement.

Rentokil, which also provides security services and tropical plants for offices, besides pest control services, has been a struggling conglomerate and an acquisition target with private equity firms proposing breakup bids. Some analysts have advised the firm to break itself for effective management. The company is to come out with first half results, which would be critical for the management's ability to halt Robinson's move.

The company had removed its chairman, Clive Thompson last year, saying his focus on short-term returns had been affecting the company's business. It warned in May that its 2005 performance could be weaker than in 2004 in view of competition and spending cuts by customers. Following Thompson's exit, Brian McGowan, then deputy chairman, and who plotted the ouster, assumed chairmanship of the company. He also brought in Doug Flynn of advertising group Aegis as the chief executive. Flynn is now piloting a restructuring of the company.

Robinson had led a management buyout of the contract services unit of food firm Grand Metropolitan in 1987 and turned it into Compass Group. As chairman of media group Granada, he took over hotel group Forte in 1996. Then, in 2002, he became non-executive chairman of spirits company Allied Domecq. Now, he is the presenter for the popular TV show "I'll Show Them Who's Boss" in which he offers management advice to businesses.

Analysts pointed out that any bid for Rentokil will need the support of U.S. fund managers Franklin Templeton, which has a 13 per cent stake in the company. The other major stake holders are UBS, Barclays Global Investors and Legal & General.

   
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