LONDON (ShareCast) - (Sharecast News) - Mitie has agreed to sell its pest control subsidiary to FTSE 100 giant Rentokil Initial for £40m in cash.
Mitie said on Monday that the proceeds from the disposal will allow it to accelerate partial repayment of the deficit under its defined benefit pension scheme and invest further funds into its core business.

Phil Bentley, chief executive of Mitie, said: "Historically, Mitie has worked with preferred partners to deliver certain specialist services for our clients. By teaming up with Rentokil Initial - the UK's largest provider of Pest services - we free up funds to invest in our core businesses, whilst ensuring service quality and innovation are maintained for our clients."

Interim managing director Andy Halsall will continue in his role at the pest control firm and Mitie has separately entered into a preferred supplier partnership with Rentokil, covering a range of services provided as part of an integrated facilities management offering to Mitie's wide range of customers.

The subsidiary took home pre-tax profits of £2m last year and had gross assets of £8.7m at the end of March.

Analysing the sale, broker Jefferies said the transaction was "another example of how third-party strategic buyers (especially in route-based industries) are willing to pay above-market multiples," and also highlighted Mitie's catering wing as potentially in line for disposal.

Mitie's shares were up 0.61% at 147.60p, while Rentokil's shares were up 1.76% at 324.00p at 1219 BST.

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