Insider Buying

Insider Buying Report: Rentokil Initial PLC (RTO:LN)

Rentokil Initial PLC
(RTO:LN)
12 months:
+13%
Activity:
Bullish
Pattern:
Purchases from multiple insiders including CEO and CFO
News:
Announced an acquisition
Rentokil Initial PLC
(RTO:LN)
12 months:
+13%
Activity:
Bullish
Pattern:
Purchases from multiple insiders including CEO and CFO
News:
Announced an acquisition
The company's emblem is printed in white cards with a red and blue colour scheme.

One of the most bullish insider transaction patterns is ‘cluster buying.’ This is where three or more insiders have purchased company stock within a short period of time.

In this report, we are going to highlight a cluster buying pattern at Rentokil Initial PLC (RTO:LN). Rentokil Initial provides pest control and commercial hygiene services. Headquartered in the UK, it operates in nearly 90 countries worldwide. It is listed on the London Stock Exchange and currently has a market capitalization of £10.8 billion.

Rentokil Initial PLC: Insider Buying

Our data shows that between December 14 and December 21, 10 different insiders – including the CEO, the CFO, and the Chairman of the Board – at Rentokil Initial bought stock. In total, the insiders purchased 261,598 shares, spending about £1.85 million on stock.

The graph represents Rentokil Initial PLC' price history, with significant buy and sell events highlighted.

Bullish Cluster Buying Pattern

This cluster buying pattern looks very bullish, in our view.

One reason we say this is that the cluster contains purchases from a number of top-level insiders. Insiders such as CEO Andy Ransom, CFO Stuart Ingall-Tombs, and Chairman Richard Solomons are likely to have a superior understanding of the group’s prospects.

Another reason is that, combined, the insiders have spent a considerable amount of money on stock. Our records show that this buying activity represents the largest amount of buying within a quarter at Rentokil Initial for several years.

Transformational Acquisition

In mid-December, Rentokil Initial announced the acquisition of Terminix Global Holdings Inc in a stock and cash deal. The group advised that the transaction will bring together two complementary businesses to create the global leader in pest control and hygiene & wellbeing, and the leader in the pest control business in North America, the world’s largest pest control market.

Rentokil believes that the Terminix deal will create significant value, enhance long-term growth potential, and be highly cash generative. It noted that the combination is expected to generate material annual pre-tax net cost synergies of at least USD $150 million by the third full year post completion and that the deal is expected to deliver mid-teens percent accretion to earnings per share in the first full year post completion.

“This is an exciting and transformational combination that will create the global leader in commercial, residential and termite pest control, and a leader in North America, the world’s largest pest control market. It brings together c.56,000 colleagues, protecting people, enhancing lives in over 87 countries, and serving c.4.9m customers. This is a win-win-win for colleagues, customers and shareholders,” commented CEO Andy Ransom.

The insider buying here suggests that those within the company are very confident this deal will create value. We see the insider buying as a bullish indicator.

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