The venture will be formed through the transfer of the Rentokil Initial businesses into CWS-boco, a company owned by Haniel
Rentokil Initial plc and Haniel & Cie are to form a joint venture creating a leading provider of workwear and hygiene services in Europe.
The joint venture brings together Rentokil Initial’s Workwear and Hygiene 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.
The venture will be formed through the transfer of the Rentokil Initial businesses into CWS-boco, a company owned by Haniel. In consideration for the transfer, Rentokil Initial will receive around €520m in cash and a circa 18% stake in the jv subject to working capital and other adjustments. It will also receive an annual fixed dividend of €19m for five years.
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 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.
The transaction also provides the potential for a strategic alliance between Rentokil Initial’s Pest Control business and the jv, as well as for the development of hygiene technology to support the jv and Rentokil Initial’s retained Hygiene operations.
In continental Europe Rentokil 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.
Haniel is a German family equity company headquartered in Duisburg-Ruhrort. Stephan Gemkow, CEO of Haniel, said: '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.'
Andy Ransom, Chief Executive of Rentokil Initial, welcomed the joint venture saying: '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.'
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).