Rentokil Initial and Haniel & Cie. Holding Company have entered into an agreement to form a joint venture (JV) to become a leading provider of workwear and hygiene services in Europe with combined revenues of c. €1.1 billion.
The JV will be formed through the transfer of Rentokil Initial’s Workwear and Hygiene businesses in 10 countries principally in the Benelux and Central & Eastern Europe regions, into CWS-boco, a company owned by German business Haniel, which has operations in 17 countries.
The Rentokil Initial and CWS-boco businesses have complementary operations, products and capabilities which the JV says will provide the potential for future growth, as well as synergies and efficiencies.
In consideration for the transfer, Rentokil Initial will receive around €520 million in cash and approximately an 18 per cent stake in the joint venture. It will also receive an annual fixed dividend of €19 million for five years.
Rentokil Initial anticipates maintaining its stake in the JV for a minimum period of three years, and for an anticipated period of five years, after which it has various exit options under the agreement to optimise further value for shareholders.
In continental Europe Rentokil Initial will retain its Pest Control, Plants, Specialist Hygiene, Premium Scenting, Medical, Dental and other operations in the countries in which its businesses are transferring to CWS-boco, as well as its Workwear and Hygiene businesses in France.
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.”
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.