Buyout group CD&R eyes merger of Balfour and Rentokil units

Financial Times 3 June 2013
New York-based buyout group Clayton Dubilier & Rice is exploring a combination of the office maintenance business units of Balfour Beatty and Rentokil Initial, in a move to create a larger, more profitable UK operator.
UK pest control and hygiene group Rentokil and CD&R are holding talks on the plan, four people with knowledge of the matter said. A transaction might value WorkPlace, the unit put up for sale by Balfour Beatty at about £200m, while Rentokil’s unit could be worth as much as £400m, the people said.
The discussions are at an early stage, one person said, while another cautioned that other private equity firms have tried such a combination in the past without succeeding, partly because of divergent valuations of each unit. “If they can get their act together, they have a strong chance of winning,” said one person familiar with the process.
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