Rentokil makes 59m pounds bid

SECURIGUARD, the security, cleaning and personnel group, yesterday rejected a pounds 59.2m bid from Rentokil, the environmental services company, writes John Murray.

The target's board said the cash offer - at 270p a share - significantly undervalued the company. Securiguard shares leapt 104p to 289p on news of the offer.

Rentokil's chief executive, Clive Thompson, said his group was making the bid to give it a position in the security market in the UK and, later perhaps, around the world.

'Security is very much in line with our strategy of becoming an international services company. Securiguard would give us a good entry into the UK market, which is why we have offered a generous premium of 46 per cent above its share price the day before the bid,' he said. Securiguard's office-cleaning operations were compatible with Rentokil's but were not the primary reason for the bid, he said.

Securiguard made pounds 5.7m before tax in the year to 1 November. Rentokil, which has diversified away from its traditional pest-control business, made pounds 122.4m last year. It is funding the offer from its cash reserves, having generated pounds 60m last year.

Analysts said the bid was unlikely to succeed at 270p and Rentokil would have to pay perhaps as much as 325p if it really wanted Securiguard.