Rentokil Initial Looks to Get out of Security Business

PARCELS are in and intruder alarms are out at Rentokil Initial. It will rival DHL in deliveries after paying Pounds 210m for Target Express to combine with its City Link division.

At the same time, boss Doug Flynn is looking for a buyer for its electronic security unit, which could fetch more than Pounds 500m. It sold its security guards arm earlier this year.

Target, owned by private equity firm 3i, pulled a flotation last year after a profits warnings from its peers.

But City Link has been one of Rentokil's best-performing divisions. The company now has total control of the business after buying out franchisees.

Flynn hopes for Pounds 10m of annual savings by 2008 from the tie-up, at a cost of Pounds 12m.

He is reshaping jumbled Rentokil (up 11/2p at 150p) around parcels, washroom services, pest control and cleaning. The arm that supplies tropical plants to offices is expected to be offloaded next.