Rentokil share price: Competition watchdog flags issues over Mitie deal

The Competition and Markets Authority has flagged issues over Rentokil Initial’s (LON:RTO) acquisition of pest control rival Mitie, the watchdog has said. The news marks another blow for the FTSE 10 group after earlier this year, the CMA ordered the company to sell several large supply contracts following its investigation into Rentokil’s merger with Cannon Hygiene.

Rentokil’s share price has been little changed in London this morning, having added 0.03 percent to 365.00p as of 09:31 BST, marginally underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.28 percent higher at 7,438.92 points. The group’s shares have added a little over a third to their value over the past year, as compared with about a 2.4-percent gain in the Footsie.

CMA flags Mitie deal concerns

The CMA issued its phase 1 decision after investigating Rentokil’s takeover of Mitie in September last year, announcing that it had “found there could be a substantial reduction in competition”. The watchdog explained that Rentokil and Mitie are two of the major four suppliers of pest control services in the UK to commercial customers, with a large combined market share.

The watchdog said that Rentokil must now offer proposals to address these concerns by April 23, or face an in-depth Phase 2 investigation into the merger.

Analysts on Rentokil Initial

The 12 analysts offering 12-month price targets for Rentokil Initial for the Financial Times have a median target of 390.00p on the shares, with a high estimate of 440.00p and a low estimate of 315.00p. As of April 5, the consensus forecast amongst 18 polled investment analysts covering the blue-chip group has it that the company will outperform the market.