Rentokil Initial Buys Residex for $30 Million

Rentokil Initial Buys Residex for $30 Million

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July 7, 2016
Brad Harbison
***Updated on July 14, at 10:30 a.m., with information from a Target Specialty Products press release****
 
Rentokil Initial announced its continued expansion in North America with the acquisition of Residex, the largest privately owned specialty chemical distribution business in the United States, for $30 million. As a result of the acquisition, Residex joins forces with Rentokil’s distribution arm, Target Specialty Products, which doubles its market reach, expanding its footprint to the Midwest, Southeast, and Northeast.
 
Founded in 1946, Residex was the distribution arm of New Jersey-based Western Pest Services. When Rollins acquired Western Pest Services in 2004, Residex President Chris Donaghy orchestrated a management buy-out. In 2010, Residex merged with Turfgrass, a distributor serving the golf and turf industry. Today, Residex, based in Novi, Mich., provides pest control and turf & ornamental (T&O) products to the eastern half of the U.S. from 25 warehouse locations across 14 states. Adding Residex to the strength of Target’s existing products business (based in California and with locations primarily on the west coast, mid-Atlantic and central U.S.) establishes a fully national market footprint and also provides entry into the Canadian products market. 
 
“We have a proactive approach to acquisitions and we identified Residex as a well-run company with a distribution footprint that complimented Target’s existing market reach,” Todd Ferguson, head of Target Specialty Products, said in a press release. “We believe Residex is a great business run by a strong team, so joining our like-minded companies makes perfect sense to further our commitment to providing best-in-class products that will increase both shareholder and customer value.”
 
Todd Griebe, former CEO and owner of Residex, will join Target Specialty Products as national director of the company’s exclusive Turf Fuel Business. In a press release, Griebe commented: “Residex was not actively looking to sell, but the more we spoke with Target and got to know their management team, the more interested we became. Combining the reach and expertise of Residex with Target’s complimentary capabilities will create the second largest products business of this type in the U.S., which will help drive value for our clients while improving customer service.”
 
The acquisition helps Rentokil fill out its coverage area throughout the Eastern U.S., John Myers, CEO of Rentokil North America, told PCT. Although Rentokil, through its distribution arm Target Specialty Products, already has an Eastern U.S. presence, “there were gaps,” Myers said. “We think the Residex acquisition will really reduce our costs because there will be less freight for our business; and we think we'll be able to provide better service to our customers because we'll be more local than in the past.” 
 
Because of this “infilling of geography” Myers said he does not anticipate office closures as a result of the merger. Residex also appealed to Rentokil because of its mix of pest control and golf/T&O products. When Rentokil acquired Western Exterminator in 2013, included in that deal was Western’s distribution arm Target Specialty Products. Like Residex, Target does significant golf/T&O product sales — about a 50/50 split between pest control product sales and golf/T&O product sales, Myers said.
 
While Myers said it is too early to discuss new management structure of the combined distributors he did say Griebe will remain with the company and be relied upon for his expertise in the T&O/golf market. Myers added that in the immediate future Residex and Target Specialty Products will continue to operate as separate brands, but that Residex likely will be rebranded as Target Specialty Products in the future. — Brad Harbison
 
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Rentokil wins two-year contract with the US government to combat Zika virus
Rentokil North America has been awarded a contract by the U.S. Centers for Disease Control and Prevention to help control the species of mosquito that could potentially carry the Zika virus across the USA and its protectorates. The requirement of the programme is to provide pest control services until June 2018, subject to government review. As required, Rentokil will deploy its network of more than 4,000 pest control experts alongside its global technical resource to target affected or high-risk areas. Additionally, a key component of the contract includes support services that entail community outreach, surveillance and inspection, and support for the distribution of materials and educational information.
 
Ransom said: “I’m proud that Rentokil has been selected to support the work of the CDC throughout the USA. Across the world we combat the dangers to public health from mosquitoes such as Dengue fever in Asia, to Malaria and West Nile virus in Africa and the Americas. Our depth of expertise and experience in global mosquito control is simply unmatched.”