Rentokil (RTOLN; BBB/BBB S) Activist stake follow up

This is the response Bloomberg shared from Peltz's activist fund; “Trian confirms that it has a significant position in Rentokil and is currently a top 10 shareholder...Trian also confirms it has reached out to Rentokil to discuss ideas and initiatives to improve shareholder value.” (emailed).

• Current: Unilever; has had a board seat from '22 and backed the new CEO's plans (whose appointment had his support) for Ice-cream spin-off & job cuts.
• 2023/24: Disney; recently disposed his stake after a unsuccessful bid for a board seat.
• 2017-21: P&G; Took a stake, eventually won a board seat pushed for major splits but company did smaller restructuring.
• 2015: DuPont De Nemours; Peltz wanted the chemical manufacturer into to two parts. Peltz failed.
• 2014: Pepsi co; Peltz wanted it to split off its snack business, failed again.

• No firm view on what impact Peltz will do noting above tilt to enhancing ROIC through splits. Rentokil acquired then rival, Terminix, in late '22 to extend its North American footprint ($6.7b using $1.34b cash + shares). IT ended FY24 with £4.7b of gross debt against £1.6b of cash & eqvs. With £1.2b of EBITDA it left it net 2.8x levered.
• Re. business structure/what could be split; North America is now 62% of sales (up from 40% in 2019), Europe (ex. UK) 20%. Pest control is 80%, Hygiene & Wellbeing 16% and France workwear 4% - hard to differentiate much on margin, workwear looks tad weaker

Re. cash curve as we said we see better value in services on Pluxee (NR/BBB+) (28s a cheap view) and/or Securitas (NR/BBB). Curve is unch this morning, likely to be a slow burner situation. Key comp. Rollins is not a credit issuer. share px divergence between the two might explain why RTO is getting activist investor attention.