In 2015 we acquired 23 businesses, 21 in Pest Control.

Acquisitions & disposals

In line with our strategy we have continued to pursue M&A targets in Growth and Emerging markets and building density in markets in which we are already active. During the year the group acquired 23 businesses (21 in Pest Control) with combined annualised revenues in the 12 months prior to acquisition of £158m. Our primary focus in 2015 was expanding the presence of our pest control business in the North American market. In October we completed our purchase of Steritech, one of the leading pest control businesses in North America, operating in both the US and Canada. The business generated revenues of approximately £97m in its last financial year. We also acquired Oliver Exterminating (which complements the Company’s existing pest control activities in Arizona and Florida and also provides market entry into Puerto Rico and the Dominican Republic) and Chicago-based Anderson Pest Solutions. Combined annualised revenues for these two companies were approximately £34m in the year prior to acquisition. During the first half of the year we expanded our presence in Central America through the acquisition of Sagrip which gives us access to the main cities in Guatemala and El Salvador.

The Company acquired a further 17 bolt-ons in Pest Control (along with two small acquisitions in Plants), in the UK, US, Australia, South Korea, South Africa, Poland, Colombia and Brazil. The process of integration is underway and on track with all acquisitions and the pipeline remains strong with further opportunities to create value, particularly in Pest Control.

During the year we exited our loss-making Austrian and Northern Ireland flat linen businesses and four other non-core businesses, predominantly in the Manage for Value quadrant. 

We monitor the integration and performance of acquired businesses closely to ensure they meet our financial hurdles and resourcing capabilities. Of the 37 acquisitions completed between 1 July 2013 and 31 December 2014, two small acquisitions in the Protect & Enhance quadrant are delivering expected returns slightly lower than the quadrant’s target hurdle rate. All other deals are delivering expected returns at or above their respective target hurdle level. The group will continue to seek further acquisitions in 2016 particularly within the Growth and Emerging quadrants and the pipeline remains strong. Our targeted annual spend on bolt-on acquisitions is c. £50m.