UK business services company Rentokil Initial Plc (LON:RTO) said today it is purchasing US pest control firm Western Exterminator Company for an initial sum of USD99.6m (EUR77.2m) in cash.
In addition to the initial amount, Rentokil will also provide a deferred consideration of up to USD15m within 18 months, using its existing financial facilities. The transaction, which will be EPS enhancing in year one, is seen to be concluded later in 2012, after receiving the needed regulatory approvals. It is in line with Rentokil’s strategy of carrying out acquisitions of pest control businesses in North and Latin America as well as in the Middle East.
Following the takeover, Rentokil will establish itself as the third biggest pest control company in North America and will have pro-forma annual revenues of USD330m and USD90m in pest control services and speciality chemical products distribution, respectively.
Western Exterminator operates via two divisions. The first one is the pest control segment which has 36 offices mainly in California and the adjacent states of Arizona and Nevada. The other is the products division which is engaged in the wholesale distribution of speciality chemicals to the West Coast and central US regions.
Last year, the target business recorded an EBITA of USD4.1m on revenues of some USD149m. The gross assets being acquired have a total book value of USD36.7m.
Toy maker Hornby plc (LSE:HRN) saw its shares fall more than 40% today after announcing that the company will not make a profit this year.
Hornby has blamed disappointing sales of London 2012 merchandise, as well as a disruption to supplies from China, for its weaker performance.
The company had produced a range of commemorative products, such as model taxis and buses, to mark the London 2012 Olympic Games and at the start of the summer it had high expectations for their performance. However, in the end sales were lower than forecast. This was attributed to a large quantity of Olympics merchandise from other licensees and deep price discounting by retailers.
The supply problems relate to a Chinese supplier that is in the process of rationalising its manufacturing facilities. Although this supplier accounts for up to 35% of Hornby’s purchases, this has been reduced from around 75% four years ago. Hornby noted that it is continuing to diversify its supply base in China and in India.
Macro-economic factors are also impacting on Hornby’s performance, with consumer spending still depressed and retailers continuing to buy cautiously, the manufacturer said.
Last year the company made a profit of GBP4.5m.
Hornby’s directors now believe that its results will be approximately break-even for the financial year ending 31 March 2013. The company noted that it continues to benefit from a strong balance sheet. Net debt at 31 August 2012 was GBP7.8m, down from GBP14.3m a year earlier.
Looking ahead, Hornby said that its performance would be “constrained significantly” in the current financial year but the company would be focusing on cost control and has also stepped up its efforts in innovation and product development.
US online commerce marketplace operator Groupon Inc (NASDAQ:GRPN) said that it had taken over domestic restaurant reservations provider Savored.
Groupon did not reveal the conditions of the deal, which has been finalised.
Savored’s platform for yield management is complementary to Groupon’s initiatives in the yield management field, where it is active via Groupon Now!, Groupon Now’s vice president, Dan Roarty, noted. The acquired business’s online platform Savored.com allows for booking reservations at restaurants with automatic deductions of up to 40% of the bills when customers visit the locations. Through its platform, Savored has connected over 1,000 US restaurants with clients.
Groupon was set up in November 2008 and is headquartered in Chicago, Illionis. The company has an office also in Palo Alto, California, locations across North America as well as regional offices globally, including in Europe, Latin America and Asia.
It has a global workforce of some 10,000. Via its eponymous website, groupon.com, Groupon provides third-party offers of goods and services at a discount in North America and worldwide. It connects businesses and consumers, delivering over 1,000 deals per day globally. The company publishes offers from 48 countries.
Groupon’s consolidated revenue soared 45% on an annual basis to USD568.3m (EUR440.5m) in the second quarter of 2012. The company swung to an operating income of USD46.5m from an operating loss of USD101m in the second quarter of 2011.