Rentokil on the acquisitions trail – Prokill the first

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On 1 May 2015 Rentokil released trading results for the first quarter of 2015 and also held an investor seminar dedicated to pest control. The results are on track, but, most interestingly, the company announced it has a war chest of around £50 million, which it is aiming to spend this year on acquisitions – the first of which would seem to be Bournemouth-based Prokill.
In a press statement Rentokil stated that revenue from ongoing operations increased by 6.2% in Q1 of which 2.5% was organic growth and 3.7% was from acquisitions. This year, the company says, has started well driven by the UK, North America, Asia, Pacific and Latin America. While conditions remain tough in France and the Netherlands, ongoing revenue in the Europe region was in line with last year.

In the first quarter, six businesses, all in pest control were acquired. The combined annual revenues of these businesses totaled £15 million in the 12 months immediately prior to acquisition. Chief executive Andy Ransom revealed that he aimed to spend a further £50 million on acquisitions in 2015.

Also at the investor seminar Rentokil launched an excellent 28-page report on the global pest control market. Although it is written through ‘Rentokil tinted glasses’, it does present some useful data. A copy of The Rentokil Report 2015: Insights from pest control markets across the globe can be found in the Pest library.

Acquisition of Prokill

The investor seminar coincided with the announcement only the day before on 30 April of the acquisition of Bournemouth-based Prokill Pest Control. Although both parties are being very coy and not revealing any details, it would appear it’s ‘business as usual’ for the core pest control side of Prokill. As to whether the company will continue to trade under that name, or switch to the Rentokil brand, no-one seems to know.

What makes this acquisition fascinating is the question of where it leaves the franchise side of the Prokill business? Traditionally Prokill has been one of the few organisations in pest control who has promoted, and been successful, with this business model.

Speaking to some of their franchisees, they appear reasonably relaxed. The franchise side of the business is run as a separate operation with each party’s interests protected under contract. Quite how this will pan out in the longer term, only time will tell.

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