Joint Venture with Haniel

16 Dec 2016

Delivering Shareholder Value

Rentokil Initial plc (FTSE: RTO, “the Company”) and Haniel & Cie. Holding Company (“Haniel”) have today entered into an agreement to form a joint venture (“the JV”), creating a leading provider of Workwear and Hygiene services in Europe with combined revenues of c. €1.1bn and APBITA of c. €130m (12 months to 30 June 2016).

The joint venture brings together Rentokil Initial’s Workwear and Hygiene businesses (“the Rentokil Initial businesses”) in 10 countries principally in the Benelux and Central & Eastern Europe regions, together with Haniel’s businesses in 17 countries which operate under the CWS-boco brand.

Key points:

  • The joint venture will be formed through the transfer of the Rentokil Initial businesses into CWS-boco, a company owned by Haniel.
  • The valuation of Rentokil Initial’s businesses transferring into the JV reflects good value at a multiple of 15.2 times APBITA (12 months to 30 June 2016).
  • In consideration for the transfer, Rentokil Initial will receive around €520m in cash and ac. 18% stake in the joint venture, subject to working capital and other adjustments.
  • In relation to its investment in the JV, the Company will receive an annual fixed dividend of €19m for five years.
  • The Rentokil Initial and CWS-boco businesses have complementary operations, products and capabilities providing the potential for future growth, as well as synergies and efficiencies.
  • The transaction is a strong fit with the Company’s capital allocation model:
    • The cash received provides increased capacity for investment in its core Pest Control and Hygiene categories in its Growth and Emerging quadrants - with guidance for expenditure on bolt-on acquisitions in 2017 now increased to £100m.
    • Rentokil Initial also protects value in its Protect & Enhance markets through an investment in a leading European Workwear & Hygiene business.
  • Proceeds will be used to reduce net debt and provide increased flexibility for value-enhancing acquisitions in Pest Control and Hygiene. The Company’s pro forma Net Debt:EBITDA ratio (as at 30 June 2016) would be reduced from 2.5x to c 2.0x and there would also be a pro forma reduction in annual interest costs of c. £7m.
  • Rentokil Initial anticipates maintaining its stake in the joint venture for a minimum period of three years, and for an anticipated period of five years, after which the Company has various exit options under the agreement to optimise further value for shareholders.
  • The transaction also provides the potential for a strategic alliance between Rentokil Initial’s Pest Control business and the joint venture, as well as for the development of Hygiene technology to support the joint venture and Rentokil Initial’s retained Hygiene operations.
  • In continental Europe the Company will retain its Pest Control, Plants, Specialist Hygiene, Premium Scenting, Medical, Dental and other operations in the countries in which the Rentokil Initial businesses are transferring to CWS-boco, as well as its Workwear and Hygiene businesses in France.
  • Completion of the transaction is subject to clearance from the competition authorities and will take place after appropriate consultation with employees. The target for completion is mid-2017.

Andy Ransom, Chief Executive of Rentokil Initial, commented:

"We are delighted to announce this joint venture with Haniel, a high-quality organisation with people who share our drive for value creation, respect for colleagues and passion for customer service. This is the right deal at the right time and the next step in the implementation of our RIGHT WAY plan.

“Overall, I believe there is a compelling logic in bringing our respective Workwear and Hygiene businesses together in these European markets, freeing up capital to invest in our higher-growth markets and delivering value for our shareholders.

“Our expectations for the full year ended 31 December 2016 remain unchanged.”

Stephan Gemkow, Chief Executive of Haniel, commented:

“Our acquisition and the establishment of the joint venture will further improve the future viability of our sustainable portfolio. CWS-boco and Initial will have an excellent opportunity to continue their current successful development in the attractive market for workwear, cleanroom and hygiene services.”

Focus on Growth and Emerging markets:

Rentokil Initial has been pursuing a strategy of growth in its Pest Control and Hygiene businesses with particular focus on its Growth and Emerging markets. Post completion the pro forma percentage of the Company’s revenues from these higher-growth markets will rise to above 70%. Pest Control will account for around 60% of revenues and over 60% of profits, and Hygiene will account for around 20% of revenues and profits respectively.

Funds will be used to reduce net debt and provide increased flexibility for value-enhancing acquisitions in Pest Control and Hygiene, with guidance for expenditure on bolt-on acquisitions in 2017 now increased to £100m.

The Company’s Workwear business in the transferring countries is significantly integrated with Rentokil Initial’s Hygiene operations in those same countries. Elsewhere, Rentokil Initial’s Hygiene businesses typically operate alongside its Pest Control businesses. Rentokil Initial remains fully committed to its global Hygiene business (which operates in over 30 countries).

Other key aspects of the transaction:

  • The Company expects a run-rate reduction in its central and regional overheads as a result of the transaction of c. £5m by the end of 2017.
  • One-off costs for Rentokil Initial (including transaction costs) are estimated to be in the region of £20m.
  • Rentokil Initial’s 10 businesses being deployed into the joint venture delivered revenues of €328m and APBITA of €53m (12 months to 30 June 2016 at 2015 CER).
  • The €520m cash to be received by Rentokil Initial will be funded through debt raised by the joint venture. This debt will initially be provided to the joint venture by Haniel at market based interest rates.
  • The net impact of the sale is expected to be slightly dilutive on Adjusted EPS in the first year after completion of c. 0.4p. Taking into account the fixed dividend, the pro forma impact on free cash flow (excluding one-offs) in the 12 months after completion is an estimated reduction of c. £10m.
  • On a pro forma basis the transaction is expected to improve Rentokil Initial’s underlying organic revenue growth, profit growth and adjusted PBTA margins.
  • The estimated profit on transfer of the Rentokil Initial businesses into the joint venture is c. €540m based on net assets of approximately €265m.
  • As part of the transaction the Company has the option to purchase Haniel’s Hygiene businesses in Italy and Ireland (which generated revenues of around €50m for the year ended December 2015).

This announcement contains inside information and the person responsible for making this announcement is Daragh Fagan, Group General Counsel and Company Secretary.


Investors / Analysts:
Katharine Rycroft, Investor Relations                 Rentokil Initial plc       07811 270 734

Malcolm Padley, Corporate Communications     Rentokil Initial plc       07788 978 199
John Sunnucks                                                   Bell Pottinger             0203 772 2566

Conference call for investors and analysts

A conference call for investors and analysts will be held at 9.15am on Friday, 16 December 2016. A copy of the presentation that will be used during the call can be downloaded here.

Participant access telephone numbers:

UK:              +44 (0)330 336 9105
France:         +33 (0)1 76 77 22 74
Hong Kong:  +852 6963 0854
USA:            +1 719-325-2202

The conference ID for this call is 8882788

A replay of the call will be available until 30 December 2016 on the following numbers:

UK:              +44 (0)207 984 7568
France:         +33 (0)1 70 48 00 94
Hong Kong:  +852 3008 0334
USA:            +1 719-457-0820

Passcode: 8882788

Notes to editors:

The Haniel Workwear and Hygiene businesses in the joint venture include:

  • Belgium, Netherlands, Luxembourg, Germany, Austria, Switzerland, Czech Republic, Slovakia, Poland, Sweden, Bulgaria, Croatia, Hungary, Romania, Slovenia, Italy and Ireland.

The Rentokil Initial Workwear and Hygiene businesses in the joint venture include:

  • Belgium, Netherlands, Luxembourg, Germany, Austria, Switzerland, Czech Republic, Slovakia, Poland and Sweden.

The joint venture does not include:

  • Pest Control, Plants, Specialist Hygiene, Premium Scenting, Medical, Dental and other operations in the above countries.
  • All businesses in France.
  • In Italy and Ireland, the Company retains all businesses and has agreed an option to acquire Haniel’s Hygiene businesses in these countries.
  • All businesses outside of continental Europe.

Rentokil Initial plc

Rentokil Initial is one of the largest business services companies in the world, operating in over 60 countries. The Company offers route-based services including Pest Control, Hygiene and Workwear through teams of local experts. For more information, visit

Haniel & Cie. GmbH

Franz Haniel & Cie. GmbH is a German family equity company which has been headquartered in Duisburg-Ruhrort since it was founded in 1756. It is from there that the Holding Company, which is wholly owned by the family, manages a diversified portfolio in line with a long-term investment strategy as a value developer. Haniel's portfolio currently includes four business divisions which are independently responsible for their own operating business and which hold a leading market position in their respective sectors: BekaertDeslee, CWS-boco and ELG (wholly owned), TAKKT (majority owned). In addition there is the METRO GROUP financial investment. For more information, visit


CWS-boco International GmbH is one of the leading international providers of professional textile services and washroom hygiene solutions. This includes the well-known CWS cotton towel, soap and fragrance dispensers and dust control mats, as well as industrially washable workwear and business wear, customer-specific corporate fashion collections, protective clothing from boco.

All services are offered in a flexible rental service. The CWS-boco Group achieved a turnover of €779 million in 2015. The company has 17 subsidiaries in Europe and China and employs around 7,500 employees around the globe. CWS-boco is wholly owned by Franz Haniel & Cie. GmbH. Further information can be found at:

View the Presentation

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