Shares in Rentokil Initial PLC (LSE:RTO) were among the picks of the FTSE 100 in a quiet Wednesday morning, rising 1.6% on the pest control company striking a deal to offload its French workwear business for up to an expected €370 million (£274m) of cash proceeds.
The buyer is US-based investment firm HIG Capital, which has signed a binding put option to obtain the workwear, flat linen and pharmaceutical clean room business in France for a gross enterprise value of roughly €410 million on a cash and debt-free basis.
Also included is an earn-out mechanism with a maximum value of €30 million, based on the performance of the business in 2026.
Once the deal is completed, which is expected by the end of the calendar year, CEO Andy Ransom said it "simplifies our business, strengthens our balance sheet, and enhances cash generation".
He noted that 10 years ago, pest control accounted for 44% of group revenue, compared to above 80% today.
Net proceeds of the sale will be used for general corporate purposes, including reducing debt and investing in the core businesses.