Terminix Shareholder Asks Board to Continue Shopping Rentokil Deal

LONDON — Franchise Partners, a top 20 shareholder in Terminix, released a statement on Feb. 9 that it “does not find the value or the structure of the proposed [Rentokil Initial] offer attractive” and that the Terminix Board of Directors should immediately add a “go-shop” clause to their agreement with Rentokil Initial. Franchise Partners said the board should “openly invite and actively engage with other parties who might offer better value to Terminix shareholders.” Rentokil Initial announced on Dec. 14 that it will buy Terminix Global Holdings for $1.3 billion in cash and 643.3 million new Rentokil Initial shares in a deal that values Terminix Global Holdings at $6.7 billion.

Franchise Partners is a global equity manager that places value on businesses built around intangible assets (e.g., brand patents, licenses and network effects). It owns 1.55 percent of Terminix’s issued share capital and has been a shareholder since 2020.

Franchise Partners noted several reasons it did not find the Rentokil Initial bid compelling, including:

The process. Instead of Terminix shopping the deal around, Terminix was approached by Rentokil Initial. Thus, Terminix agreed to terms without shopping the transaction or engaging in any other price discovery.

The value. In its statement, Franchise Partners wrote that the Rentokil Initial offer values Terminix at a 16x multiple of 2022 expected EBITDA and at 12x expected EBITDA including the conservatively estimated synergy target. Franchise Partners believes this is a very low multiple in comparison to other multiples being paid out in the pest control industry.

The structure. A very high portion (80 percent) of the stated value of the bid is being paid in a fixed number of shares of Rentokil. This transaction will materially dilute Terminix shareholders’ economic exposure to the attractive U.S. pest control category, Franchise Partners stated in the release.

At press time, Terminix was trading about 10 percent below the price Rentokil Initial would pay shareholders who elect cash and stock in the deal. A Feb. 12 Wall Street Journal article noted the recent trend of investors who trade on deal news “feeling nervous” over growing global antitrust scrutiny. The Wall Street Journal article cited Terminix as one of several companies “trading well below their agreed-upon acquisition prices, a sign that investors are more worried than usual that the deals could fall apart.”

In a Feb. 9 report, Tim Mulrooney, equity research analyst at investment bank and financial services company William Blair, wrote that it was unlikely Terminix will receive a better bid than Rentokil Initial. Mulrooney wrote, “We do not expect one of the other large strategic acquirers — which include Rollins, Ecolab and Anticimex — to bid on Terminix. We do not believe Rollins is interested, and regardless would present a higher likelihood of raising antitrust flags. Ecolab only entertains pure-play commercial pest assets. We believe only one of the three strategics (Anticimex) would consider a bid, and we assign a low probability outcome to a higher bid coming from Anticimex at this time.”

Mulrooney added that if another bid is received it would most likely come from a large financial sponsor. However, he wrote, “We see two disadvantages that a financial sponsor must overcome. First is the absence of cost synergies that are available to a strategic acquirer like Rentokil, which we estimate are well above $150 million. Second is the break-up fee of $200 million that Terminix would be liable to pay Rentokil if it does accept a superior proposal.”

A Franchise Partners spokesperson told PCT that whether or not a better deal is out there, “there’s an obligation on the board to at least explore whether there are other potential bidders who might be interested. In our experience, it’s very unusual to run a process that is not open to other parties. Given how attractive this asset is — and given the scale of M&A in the pest control industry the last decade — we would be surprised if there weren’t other bidders who might be interested. When you couple that lack of openness in the process with the very low premium, we think it raises some questions for the board.”

A Terminix spokesperson told PCT, “We appreciate the perspectives of all of our shareholders and have a long history of acting in their best interests. The Terminix Board of Directors carefully considered the transaction with Rentokil and unanimously concluded that it is the best path forward to continue our growth trajectory and maximize shareholder returns.”

The Terminix spokesperson added, “As part of a larger and stronger organization, we will offer superior service and an even more comprehensive range of solutions for customers while accelerating our investments in growth and technology. Leveraging our strong combined residential and commercial capabilities and enhanced customer density, we also expect to realize both cost and revenue synergies. The equity component of the consideration allows Terminix shareholders to participate in and benefit from the substantial upside potential of the combined company, while the cash consideration component provides value certainty. Following completion of the transaction, the combined company will be differentiated by its strong focus on people, customers and ESG, and it will be well-positioned to drive continued growth and value creation.” — Brad Harbison

National Pest Management Month Initiatives Announced

FAIRFAX, Va. — The Professional Pest Management Alliance (PPMA), which serves as the consumer marketing and public outreach arm of the National Pest Management Association (NPMA), is encouraging the industry to celebrate National Pest Management Month (NPMM) this April.

NPMM, an annual observance recognized by Chase’s Calendar of Events, highlights the professional pest control industry’s commitment to the protection of public health, food and property from the threats posed by pests.

“Pest control professionals continually play a vital role in our society, working year-round to protect our homes, families and businesses from the many threats associated with pests,” said Cindy Mannes, executive director, PPMA. “As we navigate the COVID-19 pandemic for the foreseeable future, we must recognize the men and women of our industry who have remained vigilant to keep Americans safe from pest infestations.”

For more than 40 years, this annual designation has recognized and communicated the important role of pest management to residential and commercial audiences and how critical licensed pest control professionals are to their well-being. With a concerted media relations and social media campaign, PPMA will focus its outreach efforts during NPMM on encouraging consumer and commercial audiences to “Call a Pro” when pest issues arise and not try DIY fixes. To join in the month-long celebration, PPMA is asking pest control companies to devote their social media pages to National Pest Management Month using the hashtag #NPMM in all posts and interactions on social properties this April to help bring further awareness to this special observance.

For more information about PPMA and its marketing programs or to subscribe to Mainframe, visit http://www.npmapestworld.org/ppma.

Aaron Owens to Serve on Virginia Pest Management Association Board

RICHMOND, Va. — Aaron Owens, owner of Richmond, Va.-based U.S. Pest Control, was elected to serve as a member of the Virginia Pest Management Association (VPMA) Board of Directors. Recently, he reflected on the history of his business, as well as some of the people and practices to whom he owes his success.

U.S. Pest Control was founded in 1991 by Owens’ grandmother, Joyce DeBerry. Its focus has always been on providing immediate, knowledgeable, trustworthy services, he said. Owens, 27, took the opportunity to work for the company in 2015. After managing accounts and growing U.S. Pest Control annually, he became owner in 2019 and hasn’t looked back.

Owens lauded VPMA Executive Director Andrea Coron, saying she leads an “All-Star” team. His job on the board is to give insights on the industry within Richmond, he said. As a young professional, he also can lend his knowledge about technical field resources, and he said the board is all about engaging with others and “branching off their ideas.”

Owens said that as he began to grow his company, he started to understand the power of networking. Through networking, he met his business mentor, Robert “YB” Youngblood, owner of YBConnects, who later introduced him to Cleveland Dixon, owner of Holiday Termite & Pest Control, Springfield, Va. The two hit it off immediately, Owens said. Dixon was the one who introduced him to Black Ownership Matters (BOM), an organization in support of Black economic advancement in the field of pest management. Through it, Owens said he has met others who have given him different and useful insights. — Kaitlyn McGarvey

Rentokil North America Appoints Richard Doggett Chief Revenue Officer

READING, Pa. — Rentokil North America announced the hiring of Richard Doggett as chief revenue officer.

Doggett has more than 28 years of experience in sales, marketing and operations, serving most recently at Sysco, as vice president of sales. He also served as senior director of strategic markets for Cintas, helping to diversify their business and grow the sales team.

“We’re thrilled to have Rich join our team as chief revenue officer,” said John Myers, president and CEO of Rentokil North America. “It’s a pivotal time for our organization, and we look forward to Rich’s leadership as he oversees the company’s sales and revenue generation process.”

Doggett holds a bachelor’s degree from Harvard University and master of business administration (MBA) from the University of North Carolina at Chapel Hill.

Dates for 2022 NCUE & IPAC 2022 Announced

SALT LAKE CITY, Utah — The 2022 National Conference on Urban Entomology & Invasive Pest Ant Conference will take place in mid-May. A registration form can be found on the Texas A&M University website.

The conference will take place May 15-18 at the Sheraton Salt Lake City Hotel in Salt Lake City, Utah. The purpose of the conference is to bring scientists in industry, academia and government together to open channels of communication and information as well as foster interest and research in the general area of urban and structural entomology.

The first NCUE was comprised primarily of members from academia, but the pest management industry has gradually increased its participation. Organizers said the event has become a forum to facilitate open communication of information among the various entities involved in structural pest control and an important goal of the NCUE is to promote the “next generation of urban entomologists.”

For more information, visit ncue.tamu.edu.

PPMA Launches ‘Out of Sight’ Video Project

FAIRFAX, Va. — A new video project funded by the Professional Pest Management Alliance (PPMA), Out of Sight (https://outofsight.pestworld.org), conveys to consumers the importance of working with a pest control professional at the first sign of a rodent or cockroach infestation — before it gets out of hand.

With the help of the New Orleans Termite & Rodent Control Board (NOTRCB), PPMA showcases just how much ground pests can cover when left undisturbed. PPMA says in these jaw-dropping videos, rodents can be seen walking through fluorescent dye as they traverse a kitchen and a bathroom. PPMA says it then “flips the switch” and let the results speak for themselves. The reveal? An entire room and its contents are covered in tracks.

This visual demonstration will help educate consumers on the dangerous and sometimes deadly pathogens various pests can transmit to humans, PPMA says.