Rentokil’s new chair bets $250,000 that its US pest-control turnaround is real

Rentokil Initial’s new chair has put family money into the company’s shares, and the timing tells the story: she bought on the same day the pest-control group told investors that its troubled American business had finally started to mend. A director buying stock is a small act. A chair doing it within weeks of taking the job, on the day of her first trading update in the role, is a public vote of confidence in a recovery that is still far from finished.

Rentokil is the company behind the red-and-white van that turns up when a restaurant finds droppings in the storeroom or a homeowner discovers termites in the deck. Most of its revenue now comes from North America, where its takeover of Terminix was meant to make it the biggest name in American pest control and instead brought lost customers, profit warnings and pressure from an activist shareholder. When the person running the board buys shares in that position, she is telling investors the slide is over. She is not proving it.

The buyer is Thérèse Esperdy, who succeeded Richard Solomons as chair and still chairs Imperial Brands. According to the company’s filing, a trust closely associated with her bought 10,881 American depositary shares at $22.91 each, a total of about $249,000. Each of those shares represents five ordinary Rentokil shares listed in London. The purchase was picked up by the Financial Times in its Directors’ Deals column.

What she was buying into is a business whose American engine is turning over again, slowly. North America produced $1.18 billion of the group’s $1.89 billion of quarterly revenue, roughly six dollars in every ten. Its core pest-control services grew 2.4% on an organic basis, with contract revenue up 3.1% after 2.3% the quarter before. Residential leads, the calls from households that feed the whole machine, were still falling in September, but only by about 1% after a weaker July and August. Customer retention in the region edged up to 81.1%, and the shares jumped on the day of the update.

Chief executive Mike Duffy’s fix is aimed at the people on both ends of the service call. Rentokil is splitting its American residential and commercial businesses under separate leaders, has started a pilot in Atlanta to remove about 150 friction points in how customers are signed up, served and billed, and is pushing call centres to answer leads faster. Technicians are part of the equation too: colleague retention in North America rose to 82.8%, which matters in a trade where a departing worker often takes the route’s customers with them.

The numbers still leave a gap. Organic growth in American pest services is less than half the 5.7% the international pest business delivered, and a lead count that is shrinking more slowly is still shrinking. The savings meant to pay for the American investment will come from procurement, offshoring and outsourcing in the international business, which suggests part of the bill for the American recovery will be paid in jobs and contracts elsewhere. Profit guidance was only reaffirmed, not raised. And the finance chief, Paul Edgecliffe-Johnson, is retiring for family health reasons. Against a $200 million buyback, a quarter-million-dollar purchase is a signal, not a source of capital.

For British readers the picture is mixed: core pest control in the UK grew 9.2%, while the property-services and asbestos-removal units were hurt by a weak housing market.

The trust bought the shares on October 22, the day of the third-quarter update. Esperdy took the Rentokil chair on September 1 and hands the Imperial Brands chair to John Rishton on December 1. Edgecliffe-Johnson leaves the board on January 31, and the buyback, run by Goldman Sachs International, must be completed by February 24, 2027, in time for the full-year results. Those results will show whether the September dip in calls from American households turned into growth or merely stayed a smaller fall.

Tags: Mike Duffy, Rentokil Initial, Terminix, Thérèse Esperdy, insider buying, pest control