Northern Expansion

Continuing to grow its business through acquisitions, Rollins, Inc., Atlanta, announced last month that its Orkin subsidiary has reached an agreement in principle with Johnson Wax Professional to acquire its Canadian pest control subsidiary, PCO Services, Inc.

PCO Services, Inc. recorded revenues of about $25 million in its latest fiscal year and is the leading pest control provider in Canada. The transaction is subject to appropriate regulatory approval. Orkin has an agreement in principle with S.C. Johnson — the company has not received regulatory approval, conducted the total due diligence process or finalized the purchase. Purchase price was not announced.

Orkin, a wholly owned subsidiary of Rollins, Inc., would acquire all the shares of capital stock of PCO Services, together with certain assets. This would be Orkin’s 11th purchase this year. Earlier this year, Orkin reached an agreement in principle to acquire S.C. Johnson’s commercial pest control division, PRISM.

Thomas Diederich, vice president for acquisitions/government relations at Orkin, said Orkin has been in negotiations with S.C. Johnson concerning PRISM and PCO Services for about five years.

"We are excited by the market opportunities the acquisition of PCO provides," said Gary W. Rollins, Rollins, Inc. president. "This acquisition is a major step in our international expansion and we are delighted to have acquired the No. 1 company in Canada."

According to Diederich, the company looked north of the border because the acquisition "allows Orkin to gain international experience without going abroad."

Diederich added that although the company’s most recent purchase was in Canada, Orkin plans on focusing its future acquisitions in the United States. Currently, Orkin is the fourth largest company in Canada.

John Abell, president of Abell Pest Control, Etobicoke, Ontario, says he thinks Orkin’s acquisition of PCO Services will strengthen the Canadian pest control industry.

"I think it’s a very positive step for the Canadian pest control market. PCO Services is and has been a significant player in the Canadian marketplace," he said. "They are the largest company in Canada and they are our largest competitor. We’re both very strong, established companies in the Canadian marketplace and I’m confident we’ll successfully co-exist in the future."

W. John Walley, North America president of Johnson Wax Professional, said, "This sale conforms to our new global strategy focusing on core capabilities in floor care, food safety and restroom care and housekeeping, targeted against strategic end user segments. We believe we can best provide the critical pest control capability to strategic end users through alliances and partnerships, rather than total ownership. Our recent retail pest elimination joint venture with Orkin is an example of that strategy."

"Orkin’s core business is pest control, unlike S.C. Johnson, whose core business is retail," Abell added, "so it’s a positive step that will add value to the industry. It should increase awareness and the quality of the industry."

Orkin says that it doesn’t intend to alter the way PCO Services does business.

"Currently we have no plans to change PCO operations," Diederich says. "In the future there may exist opportunities with (Orkin’s) four Canadian branches."

"Orkin’s expansion plans are to continue to look for quality pest control companies that fit our market areas and present customers with similar service options," he added.

Orkin currently serves more than 1.7 million customers in the United States, Canada and Mexico from more than 400 company-owned locations.