Rentokil to sell France Workwear for €410m

(Sharecast News) - Rentokil Initial said on Wednesday that it has agreed to sell its Workwear business in France to H. I. G Capital for around €410m (£344m). France Workwear comprises Rentokil Initial's workwear, flat linen and clean room business in France.

Net cash proceeds are expected to be about €370m and the deal is expected to complete in the fourth quarter of this year.

The company said the sale positions it "more clearly as a streamlined Pest and Hygiene & Wellbeing business, enabling the group to effectively concentrate resources to better capitalise on the large, attractive long-term growth markets within these core areas".

Once the France Workwear business is sold, Rentokil will be a business with revenue comprising around 80% Pest and 20% Hygiene & Wellbeing.

Rentokil also said the deal should enhance its capital efficiency through a meaningful reduction in capital expenditure requirements and improved cash flow, with a benefit to the free cash conversion percentage of approximately 100 basis points.

Net proceeds will be used for general corporate purposes including deleveraging the balance sheet while continuing to invest in the core business organically, as well as investing for growth through bolt-on M&A.

Chief executive Andy Ransom said: "This transaction is a further important step in the execution of our strategy to focus the company on Pest Control and Hygiene & Wellbeing, where we are a market leader.

"Over recent years we have been reshaping our portfolio towards higher growth markets and lower capital expenditure operations. In 2015, Pest Control accounted for just 44% of group revenue, today it's above 80%. This simplifies our business, strengthens our balance sheet, and enhances cash generation."