Acquisition of Leading Vector Control Company
For many vector-borne diseases such as Zika Virus, West Nile Virus, Yellow Fever, Malaria and Dengue Fever, vector control services are the most effective way to protect public health.
VDA provides a full range of vector control services, including weekly monitoring of mosquito levels, species identification and disease testing (using its in-house laboratory) and control of both adult and larval mosquitoes from the ground and using aircraft. In line with this acquisition, the Company is establishing a new global centre of excellence for mosquito control, which will be based in North America.
VDA also provides lake management services, a new route-based service line for Rentokil North America. Invasive aquatic plants destroy fish and wildlife, and clog pipes used for drinking water, hydroelectric and irrigation supplies. Services include chemical treatments, mechanical vegetation removal, aeration and fountain management. The Lake Management division, which is predominately a contract portfolio business, is also the largest of its type in North America.
Headquartered in Little Rock, Arkansas, VDA operates from 52 offices in 32 U.S. states. Annualised revenues for the 12 months prior to acquisition were c.$47million (£36 million).
Commenting on the acquisition, Andy Ransom, CEO of Rentokil Initial, said:
"The growing threat to public health from mosquitoes makes vector control an important and growing part of the overall pest control market. Factors such as climate change and increased travel are leading to more vector-borne disease outbreaks than ever before.
"We are now positioned strongly in two attractive markets that are characterised by good growth, high technical skill level and strong regulatory requirements, attributes that play well to Rentokil Initial's traditional strengths and expertise. This is another important step towards our ambition to create a business in North America with revenues of c.$1.5 billion and and margins of c. 18% by the end of 2020.
"Given the increasing demand for mosquito control in many parts of the world and the unrivalled expertise in VDA, this is also a significant acquisition for our global pest control business.
"Our M&A pipeline remains very strong and therefore we now expect spend to be £100m+ in H2 2017."
About Vector Disease Acquisition, LLC ("VDA")
Mosquito Control Services
The main mosquito control operations operate under a legal entity called Vector Disease Control International, LLC.
Demand for mosquito control is driven by public health needs or a combination of public health and nuisance management and is highly technically focused. VDA provides a full range of mosquito control services. 90% of revenues are contracted.
VDA serves primarily governmental customers (cities, counties and mosquito abatement districts plus the Federal Centers for Disease Control (CDC)) but there are also some industrial customers.
The US vector control market for municipalities and government is estimated at$400mp.a.
The business has a high-experienced management team and employees 80 FTE and ~300 seasonal employees. VDA's aerial division has 14 aircraft operating out of 4 airports.
Lake Management Services
The main lake management operations operate under a legal entity called Solitude Lake Management, LLC.
Lake Management provides services primarily on the east coast of the USA. Customers are municipal, state and federal governments, homeowner associations, lake associations, golf courses and corporate entities.
Revenues are predominately contracted with services including aeration and fountain management, controlling invasive aquatic vegetation and algae in lakes and ponds.