Rentokil Initial and Haniel & Cie. in joint venture
Staff Writer |
Rentokil Initial and Haniel & Cie. Holding company entered into an agreement to form a joint venture.
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The companies are creating a leading provider of Workwear and Hygiene services in Europe with combined revenues of c. €1.1bn and APBITA of c. €130m (12 months to June 30, 2016).
The joint venture brings together Rentokil Initial’s Workwear and Hygiene businesses in 10 countries principally in the Benelux and Central & Eastern Europe regions, together with Haniel’s businesses in 17 countries which operate under the CWS-boco brand.
The joint venture will be formed through the transfer of the Rentokil Initial businesses into CWS-boco, a company owned by Haniel.
The valuation of Rentokil Initial’s businesses transferring into the JV reflects good value at a multiple of 15.2 times APBITA (12 months to June 30, 2016).
In consideration for the transfer, Rentokil Initial will receive around €520m in cash and a c. 18% stake in the joint venture, subject to working capital and other adjustments.
In relation to its investment in the JV, the company will receive an annual fixed dividend of €19m for five years.
The Rentokil Initial and CWS-boco businesses have complementary operations, products and capabilities providing the potential for future growth, as well as synergies and efficiencies.
Proceeds will be used to reduce net debt and provide increased flexibility for value-enhancing acquisitions in Pest Control and Hygiene.
The company’s pro forma Net Debt:EBITDA ratio (as at 30 June 2016) would be reduced from 2.5x to c 2.0x and there would also be a pro forma reduction in annual interest costs of c. £7m.
Rentokil Initial anticipates maintaining its stake in the joint venture for a minimum period of three years, and for an anticipated period of five years, after which the company has various exit options under the agreement to optimise further value for shareholders. ■