Rentokil faces pounds 70m costs for BET takeover

Rentokil, which yesterday launched its offer document for rival services group BET, faces takeover costs of close to pounds 70m. Institutional investors which are underwriting the pounds 1.8bn offer stand to make about pounds 17m, with a further pounds 10m going to the key banking and stockbroking advisers.

The estimated total costs, pounds 57m in fees plus VAT, were contained in the listing particulars, not yesterday's offer document. BET's defence fees are likely to bring the total cost of the bid battle to well over pounds 100m.

Clive Thompson, Rentokil's chief executive, defended the high price being paid to pursue the bid, arguing that the underwriting fees were inevitably going to push up the cost.

Rentokil is offering 9 new Rentokil shares and pounds 8 in cash for every 20 BET shares, or a cash alternative of 179.5p per BET share. The lead underwriters are Lazard Brothers, NatWest Markets and SBC Warburg.

Meanwhile, Rentokil's offer document, which sets the 60-day bid timetable running, contained little of the expected personal attacks that dominated the opening days of the bid.

Mr Thompson said: "We have dispensed with that, and want to concentrate on the benefits of the takeover to both companies' shareholders." Rentokil accepted that there were few new arguments in its documents. "The logic and benefits of the bid remain strong," Mr Thompson said.

Despite Rentokil's failure so far to secure an agreed takeover, Mr Thompson said yesterday that he was still willing to talk to BET's chief executive, John Clark.

Mr Clark yesterday called Rentokil's document "backward looking and outdated". He added: "Rentokil's offer is wholly inadequate given BET's recent strong performance and prospects. Our shareholders are benefiting from BET's significant growth, which derives from its focused strategy of concentrating on specialist, high value-added services. By contrast, Rentokil's document does not put forward a strategy for long-term growth."

Last week, through its advisers, Rentokil approached BET to discuss the acquisition by Rentokil of 75 per cent of BET's operations, but was rejected.

Mr Thompson said yesterday that it was still Rentokil's intention to buy the whole of the businesses, and the offer document contains nothing about plans to sell-off parts of BET.

The board of BET said it will shortly be writing to shareholders setting out in detail its reasons for rejecting this offer.