Rentokil: The Terminix Acquisition

When announcing their agreement to merge in December 2021, creating a clear leader in global pest control, UK-based Rentokil and Tennessee-based Terminix described extensive benefits of the cross-border combination. The companies touted the advantages of their combined scale, their complementary portfolios of products, regions and technologies, and the significant cost synergies. Yet, the markets seemed entirely unimpressed, with Rentokil's share price down 9% in the hours after the deal was announced. While the boards of both companies had recommended the merger, it would now be up to shareholders to decide. Was this deal a lifeline for long-suffering Terminix investors, who were increasingly apprehensive about the company's ability to improve performance? Was this the right moment for Rentokil to pursue such a large deal rather than continue with its historical approach of gradually consolidating the market? In short, would this proposed combination create value, and if so, for whom?