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Highlights
- Rentokil has agreed to acquire Terminix.
- The deal values Terminix around US$6.7 billion.
- The enlarged firm will trade on the London Stock Exchange (LSE) and the New York Stock Exchange (NYSE).
The stocks of Terminix Global Holdings, Inc. (NYSE:TMX) were trending on Wall Street Tuesday, after the commercial pest control firm Rentokil Initial Plc (LON:RTO) agreed to acquire Terminix to expand their business in the United States, the largest pest-control market throughout the world.
The companies announced that they have entered into a definitive agreement under which Rentokil would buy Terminix in a stock-and-cash transaction that will value the firm at US$6.7 billion or £5.1 billion with an implied price of US$55 apiece. This implies a premium of 47% of Terminix's last closing price.
The board of directors of both the companies is backing the deal, marking the largest-ever acquisition of Rentokil.
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Terminix Global Holdings, formerly known as ServiceMaster Global, provides residential and commercial termite and pest management services. It engages in offering protection against termite damage, insects, and other pests like cockroaches, fleas, bed bugs, scorpions, etc. It is considered among the major termite services provider in the United States. The firm is based in Memphis, Tennessee.
Meanwhile, the companies said that the deal would enable Rentokil to raise their scale while reducing the costs. It would also boost its earnings after one year from the completion of the deal, the companies added.
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Notably, under the agreement terms, Rentokil will issue around 643 million new shares which would include the American Depository shares as well. In addition, the stockholders of Terminix will own around 26% of the expanded company, which would trade in the London Stock Exchange (LSE) and the New York Stock Exchange (NYSE).
Terminix shareholders would be allowed to choose between cash or shares in the proposed transaction. Meanwhile, Rentokil intends to pay 20% of the total acquiring price in stock.
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Stock performance & highlights of Terminix Global Holdings, Inc. (NYSE:TMX)
The TMX stocks were priced at US$48.32 at 9:40 am ET on December 14, up 29.16% from their previous closing price. It has a market cap of US$4.53 billion, with a P/E ratio and a forward one-year P/E ratio of 8.08 and 25.80, respectively. The EPS of Terminix is US$4.63.
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The TMX stock saw the highest price of US$55.00 and lowest price of US$36.30 in the last 52 weeks. Its trading volume on December 13 was 1,027,855.
In the third quarter of fiscal 2021, the revenue of the company was US$530 million, representing an increase of 4% from the same quarter of the previous year. Its net income came in at US$38 million, or US$0.30 per share, against a loss of US$7 million, or a loss of US$0.06 per share in Q3, FY20.
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Bottom line:
The stock value of Terminix tumbled 24.65% YTD. Meanwhile, Rentokil generates around 60% of its total revenue from pest control, and the majority of the 228 business acquisitions since 2016 were from the same field.
