PracticeAccounting FirmsOverview: Rentokil Initial

Overview: Rentokil Initial

Prospects: Alan Brown joins old friends at Rentokil Initial

Alan Brown and chairman John McAdam

New brooms: Alan Brown and chairman John McAdam

Former chief financial officer for ICI, Alan Brown is to take on the role of
chief exec-utive at commercial and domestic pest controllers
Rentokil
Initial
.

Having recently been pivotal in managing the sale of ICI to Akzo Nobel for
£8.1bn, Brown took up his new position at the pest control business this week.
Rentokil itself is in the sewers: having issued two profit warnings since
December.

What’s happened?

Rentokil’s board was weeded out recently, after shareholders ousted chief
executive Doug Flynn with a substantial £1.2m payoff.

Flynn spent three years in his role at Rentokil before the board lost
patience. The final coup de grace came when shares dropped a quarter on the back
of the second profit warning in February, making the total fall in share price
60% in six months while under his control.

The thorn in the side of Rentokil is said to be their parcel business, City
Link, which has fallen into the red. The company admitted in March that ‘the
management [of City Link] had been poor, with under-staffing leading to clients
being lost’. Flynn also announced that the company would struggle to break even.

After the decision to get rid of Flynn and chairman Brian McGowan, the ICI
trio were asked to step in and clean up the struggling business. Brown, who
previously spent 25 years at Unilever, latterly as CFO, will be joined by John
McAdam, formerly chief executive at ICI as chairman, and Andy Ransom, formerly a
senior lawyer and head of M&A at ICI, becoming head of corporate
development.

They have a good track record. ICI announced a profit warning in 2003, wiping
out almost half the value of its shares, but it managed to fetch £8.1bn at the
end of last year.

What’s going to happen…

The three have been given a one off incentive scheme receiving, 7.5 million
shares each. If the share price rises to 180p they could stand to make £13.5m
each.

However, if they hold their shares until the price reaches 280p each, they
could stand to make as much as £31.5m meaning the company would have added £3bn
to its value.

Brown believes that the trio will have to focus on ‘driving operational
excellence across all the Rentokil Initial businesses’ in order to turn the
company around and it seems that investors have every faith that they can, with
shares rising 17% following the announcement of their appointments.

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