Rentokil Initial and Terminix have entered into a definitive agreement under which Rentokil Initial will acquire Terminix for stock and cash.
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The Transaction will bring together two complementary businesses to create the global leader in pest control and hygiene and wellbeing, and the leader in the pest control business in North America, the world's largest pest control market.
Under the terms of the Agreement, Rentokil Initial will issue to Terminix shareholders at closing aggregate consideration comprised of approximately 643.29 million new Rentokil Initial shares (representing approximately 128.66 million American depository shares ("ADSs"), based on a 1:5 ADS to Rentokil Initial share ratio) and approximately US$1.3bn in cash.
Based on Rentokil Initial's 5-day average daily volume weighted share price and the 5-day average of the Sterling-US Dollar exchange rate both over the period spanning 6 to 10 December 2021 inclusive, this values the entire share capital of Terminix at US$6.7billion, implying a value of US$55.00 per share of Terminix common stock, and represents an aggregate consideration mix of 80% stock and 20% cash and:
• a premium of 47.0% over the closing price of Terminix common stock on 13 December 2021 (being the last trading day prior to this announcement); and
• a premium of 32.5% over the 90-day volume weighted average share price of Terminix ending on 13 December 2021.
Terminix shareholders may elect to receive all cash or all stock consideration, subject to proration in the event of oversubscription. Each Terminix share for which no election or an invalid election is received will be deemed to have elected for all stock consideration.
The value of the per share cash election and the value of the per share stock election will be equalised ahead of closing such that the value of each election choice will be substantially the same.
The Combination will result in Terminix's existing shareholders owning approximately 26% of the Combined Group on completion and sharing the benefits accruing to the Combined Group.
For the year ended 31 December 2020, the Combined Group's pro forma revenue would have amounted to US$5.7bn (£4.3bn), with EBITDA of US$1.2bn (£897m) and Free Cash Flow of US$608m (£458m). ■