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Rentokil buys U.S. pest control business Steritech for $425 million

Rentokil Initial, a British support services firm, has agreed to buy Steritech, a pest control business, for $425 million. According to Rentokil the deal is still subject to regulatory approval. The buyer hopes the deal will strengthen its presence as the No. 3 pest control business in the U.S. market, valued at $7.5 billion.

Chief Executive Andy Ransom said, “It is going to drive our revenues more aggressively and really give us an opportunity to improve our North American margins significantly.”

In the last 18 months, Rentokil has made about 40 acquisitions with 20 of them being in North America.

Stephen Rawlinson, an analyst for Whitman Howard, said, “The market is likely to be neutral on the deal until the earnings improvements start to come through, though clearly at such rates the deal is earnings-enhancing from the start.”