Yahoo Finance Nelson Peltz’s Trian Amasses Top 10 Stake in Terminix-Owner Rentokil
(Bloomberg) -- Activist investor Nelson Peltz’s Trian Fund Management LP has amassed a significant stake in Rentokil Initial Plc, giving a boost to the UK-based pest-control company’s beaten-down shares.
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The investment firm said it’s now among the top 10 shareholders in Rentokil, which owns Terminix in the US. Trian has reached out to Rentokil to discuss ideas for boosting shareholder value, the firm said in an emailed statement confirming an earlier Bloomberg News report.
Shares in Rentokil jumped as much as 16% in London, reaching the highest level in about three months. The stock was trading about 12% higher as of 9:26 a.m. In London, giving the company a market capitalization of about £11.8 billion ($15 billion).
Before Peltz’s stake was disclosed, the shares had lost more than a third of their value in London over the last 12 months as the pest-control business suffered from a post-Covid slump. During the pandemic, demand surged as home and business owners sought to kill viruses, bacteria and other nuisances. A scare over bed bugs in hotels added a further boost when lockdowns eased and travel resumed.
The exact size of the stake and Trian’s plans for the company couldn’t immediately be learned. Representatives for Rentokil didn’t provide a comment.
Unilever Stake
The Rentokil stake adds another prominent UK holding to Trian’s portfolio after Peltz’s firm invested in Unilever Plc and appointed him to its board about two years ago. That move preceded a major strategic shift at the Dove soap maker, which since then has changed its top management and backed away from the previous leadership’s focus on social and environmental pledges in place of a renewed push for higher profits.
UK-based companies are also facing increased pressure from activist investors to consider dropping their London listings and re-list in the US for better liquidity, valuation arbitrage and access to a wider investor base.
Rentokil generated most of its 2023 revenue, about £3.3 billion, in North America, according to its annual report. It trades at about 17 times 12-month forward earnings, Bloomberg-compiled data show. In comparison, US peers Ecolab Inc. and Rollins Inc. trade at roughly 35 times and 46 times forward earnings, respectively.
In 2019, Trian took a roughly 6% position in Ferguson Plc, a supplier of plumbing and heating products. Trian said at the time that Ferguson was trading at a discount to its US peers despite having an “attractive” North American business. Ferguson moved its primary listing to New York in May 2022 and has seen its shares jump roughly 65% since.
Trian has waged fights at other prominent companies including, most recently, Walt Disney Co., where Peltz challenged Chief Executive Officer Bob Iger’s team for a board seat. Disney won out in the end, with all of its nominees securing shareholder support.
Rentokil has built its business through a series of acquisitions. These include Terminix, which it agreed to buy for $6.7 billion in 2021.
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