Rentokil set to continue acquisition spree while organic growth continues

Pest control expert Rentokil Initial said this morning it is planning to continue an acquisition-heavy strategy and is likely to spend between £200m and £250m on takeovers this year.

The firm showed 4.9 per cent growth from takeovers in the first three months of the year, while organic revenue grew at four per cent.

Read more: Competition watchdog expresses concern over Rentokil and Mitie merger

It signed eight deals in the quarter – four in pest control and four in its hygiene business sectors – adding combined revenues of around £29m.

“We are encouraged about our prospects for further mergers and acquisitions this year and our pipeline of value-enhancing opportunities is strong,” the company said in a statement to shareholders this morning.

Revenue in the firm’s pest control segment grew 12 per cent including acquisitions but subtracting disposals or closed businesses. Hygiene, meanwhile, rose 7.2 per cent, while the protect and enhance market stayed in line with the first quarter of 2018.

“We have had a good start to 2019 and I’m pleased with our performance in the first three months of this year. I am confident of another year of successful growth for the company, in line with market expectations,” said chief executive Andy Ransom.

Shares were up around 1.3 per cent this morning to 373p.

Last week Rentokil was told it might face an investigation from the Competition and Markets Authority (CMA) over its takeover of Mitie’s pest control arm late last year.

Read more: Rat catcher Rentokil benefits from hot summer of pest control

The firm has been given until 23 April to tell the CMA how it will ensure that competition is not severely reduced by the acquisition.

It said last week that the acquisition was small and in line with its strategy to buy “high quality pest control businesses in growth and emerging markets.”