United Kingdom-based Rentokil Initial Plc on Tuesday announced the purchase of Steritech, a Charlotte-based pest control business, for $425 million in cash.
The deal, Rentokil’s biggest in 10 years, is expected to deliver profit before interest, tax and amortization of as much as $30 million in 2016, according to the company.
The acquisition will “drive growth and margins in our top priority market,” said Rentokil Chief Executive Officer Andy Ransom. The company’s pest control business in the U.S. has been growing by 15 percent per year since 2006, compared to less than 5 percent in continental Europe, he added.
Steritech was founded in 1986 by John Whitley as a commercial pest prevention company, according to the company’s website. Whitley is currently executive chairman and Rich Ennis is CEO, according to the site.
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Following the deal, described as a 6 1/2-year “courtship,” North America becomes Rentokil’s largest region, with annual revenue of about $800 million, Ransom said. In the first half of 2015, it accounted for about $270 million.
The acquisition of Steritech opens up a new market for pest control and cleaning group Rentokil Initial Plc, with potential to expand it to Europe in the next three years, according to Ransom.
Rentokil plans to sell Steritech’s “brand standard auditing” services, which involves helping restaurants and hotels comply with legal or customer standards, to its clients in Holland, Germany, the U.K. and Australia, Ransom said in a phone interview.
Rentokil continues to look for acquisitions in North America and emerging markets such as China, India and Latin America. The main focus is on the pest control business, but companies in the hygiene industry are also potential targets, according to Ransom. In 2014, the textiles and hygiene business accounted for 55 percent of its revenues, and pest control for 45 percent, Bloomberg data shows.
The Steritech deal is expected to close in the fourth quarter of 2015 and is subject to U.S. regulatory approval.