(Adds CEO, analyst)
By Li-mei Hoang
LONDON, Sept 1 (Reuters) - British support services company
Rentokil Initial RTO.L has continued its North American
expansion with its biggest deal in 10 years, agreeing to buy
pest control business Steritech for $425 million.
Rentokil said the deal, which is subject to regulatory
approval, strengthens its position as the No.3 pest control
business in a U.S. market worth about $7.5 billion.
Revenue from Rentokil's North American operations now
account for $800 million, making it the biggest operation in the
group, the company added.
"It is going to drive our revenues more aggressively and
really give us an opportunity to improve our North American
margins significantly," Chief Executive Andy Ransom said of the
Steritech deal.
Rentokil, which offers services from pest control to the
supply of workwear, has made about 40 acquisitions in the past
18 months, 20 of which were in North America.
The group's shares were up 1.4 percent at 150 pence at 0735
GMT, roughly in line with the mid-cap FTSE .FTMC index.
"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," said
Stephen Rawlinson, analyst at brokerage Whitman Howard.
"It also begs questions about future disposals at Rentokil,
given the clear strategic intention to be a global leader in
pest control."
(Editing by David Goodman)