The pest control industry has been left to wonder about the future of Rollins, Inc., following a June 4 Bloomberg article that stated Rollins was “exploring strategic options including a potential sale,” as told to the news outlet by people familiar with the matter.
As reported by Bloomberg, Rollins is working with financial advisers but has not yet launched a formal auction and could choose to remain independent. Coming from a trusted financial source like Bloomberg, the news caused a stir throughout the pest control industry. The following is based on PCT interviews and information collected by PCT at press time.
In speaking with several industry contacts, most seemed to think an outright sale of the firm is unlikely. Harry Cynkus, longtime chief financial officer (CFO) of Rollins, who retired in 2015, told PCT the Rollins family considers Rollins, Inc., the “crown jewel” of the family’s holdings, and “a bedrock they want to keep in the family for many years to come.”
Moreover, Cynkus and others say they believe the firm’s premium valuation would make it a challenging sell. For example, following the Bloomberg report, investment bank J.P. Morgan sent an email with an analysis of this development, including a review of potential suitors. “ServiceMaster (Terminix) are in a period in (sic) transformation and are nearly as large as Rollins. We believe that Rentokil would deem Rollins a great strategic fit but the valuation differential is significant. Ecolab only operate in commercial pest control. Anticimex is still majority owned by EQT who bought the business in 2012 and subsequently sold minority stakes to select Nordic investors (19% in 2017) and GIC (10% in 2019). Anticimex has been very acquisitive, including in North America.”
What’s more likely, according to several sources contacted by PCT, is that Rollins Chairman Randall Rollins and CEO Gary Rollins are exploring a block trade in order to monetize some of their holdings, possibly for estate planning purposes. Randall Rollins is 88 and Gary Rollins is 75.
In a June 5 e-mail from investment banking firm William Blair, analyst Tim Mulrooney wrote, “We believe the most likely outcome would be a minority investment or a brokered sale by the Rollins family for a proportion of its current holdings (which are collectively 55% of total shares outstanding as of February 28, 2020).”
A Rollins spokesperson contacted by PCT said the company “has a policy of not commenting on market rumors one way or the other.” — Brad Harbison
Editor’s note: The August issue of PCT will feature an article by PCO Bookkeepers’ Dan Gordon that discusses how market conditions may affect PMPs’ taxes and their estate planning in the months ahead. Stay tuned!
Orkin Donates $100K to American Red Cross
As part of its “Donating Blood Should be Voluntary” campaign, Orkin Pest Control donated $100,000 in June to the American Red Cross via a virtual check presentation between Freeman Elliott, president of Orkin, and Jennifer Pipa, CEO of American Red Cross of Georgia.
Through this initiative, Orkin donated $25 to the American Red Cross when a customer signed up for a mosquito control service in late April and May, up to $100,000. Prior to making the virtual check presentation, Elliot said in a video that Orkin was proud “to have achieved that milestone ahead of time. This partnership is part of what we call ‘Donating Blood Should be Voluntary.’ We wanted to do our part during this trying COVID-19 time, to help a great cause that really contributes to our community, and we are thankful for that.”
In accepting the check, Pipa thanked Orkin and said that despite challenges brought on by COVID-19 “through donations like this we are able to ensure that the blood supply is safe and continuous to support any emergency needs that might arise. Thank you again Orkin for your generous support.”
The purpose of this partnership is to save lives on two fronts — to aid the Red Cross in maintaining our country’s blood supply and to protect people against the public health threats of mosquitoes.
With no known end date in this fight against coronavirus, Orkin said it wanted to do its part to support the American Red Cross to help maintain a sufficient blood supply for the weeks and months to come.