Rat-catcher Rentokil cleans up with German joint venture partner

Rentokil Initial (Other OTC: RKLIF - news) , one of the main corporate beneficiaries from the post-referendum fall in the pound, is placing a big bet on Europe by forming a new venture with a continental peer.

The support services group - best known for its pest-control division - will receive €520m (£440m) in cash as part of the deal with Haniel, a privately owned German company.

It will result in a joint venture involving Rentokil's workwear and hygiene business in 10 countries mainly in the Benelux area and central and eastern Europe.

Haniel's businesses in 17 countries will also be part of the venture.

The announcement confirms details of the deal first reported by Sky News.

Rentokil will own an 18% stake in the new entity.

It is one of the biggest strategic moves made by the group for years, as it seeks to focus efforts on higher-margin operations.

The company collects, cleans and returns more than 100 million items of workwear annually through its Initial brand.

The deal comes several months after Rentokil said its annual profits were likely to surge because of the weakness of sterling.

Under Andy Ransom, its chief executive since 2013, and his predecessor Alan Brown, Rentokil's fortunes have been revived in the wake of a long slump.