Rentokil North America boss offloads £1.2m in shares

Plague has joined pandemic as another catastrophe for 2021, although thankfully for the world this was just a mice infestation in Australia. The rodent plague did, however, leave pest control and hygiene group Rentokil Initial looking like Nostradamus, given an Australian business was part of its large run of acquisitions in 2020. 

The company surfed a Covid-19 wave over the past year, increasing adjusted earnings by 8 per cent as infection control spending overcame a slowdown in office demand. The hygiene and pest control company was trading at record highs at the end of 2020, getting close to 600p, but has since dropped back to about 500p.

Overall, the pest control division is the company’s largest and most important. But it is hoping to hold on to the disinfectant growth seen last year. Management has announced a capital markets day for September with the title “Hygiene: the Next Pest Control?”, so has given itself plenty of time to work this out. 

The outlook for this year is for operating profits from hygiene to dip from £173m in 2020 to £145m, according to consensus estimates compiled by FactSet, while sales for the division are forecast to climb 1 per cent. 

Rentokil North America managing director John Myers picked this environment to sell 250,000 shares in the company, for £1.2m. This is his second major share sale in 12 months. Myers sold 225,000 shares in August 2020, also reaping £1.2m from the earlier transaction. 

The company did not respond to a request for comment. 

Rentokil has solid earnings prospects even as the world happily looks to be on a less Covid-19-affected path.

We have recently been witness to several director deals with seven-figure aggregates value, but they all look a little anaemic set against the £400m sale struck by Wizz Air chair Bill Franke.

The mega-deal, breathtaking as it may seem, needs to be set in context. Franke is the co-founder of Indigo Partners LLC, a private equity fund focused on air transportation, so we should not be too surprised to see a sale of this magnitude. After all, the fund has major ownership stakes in a handful of low-cost airlines across the globe, so you must presume that it will be looking to crystallise returns or raise liquidity from time to time.

Nonetheless, it did come on the back of several other weighty disposals by insiders, including a £6.4m deal registered at the beginning of March by Wizz co-founder and chief executive, József Varadi. So investors would be justified in asking whether the shares have already reached their high-water mark since they slumped to an almost three-year low in March last year.

European passengers and carriers have both been trying to second guess government policy in the wake of the pandemic. Yet initial optimism through the early part of 2021 dissipated once it become clear that the EU’s vaccination programme had got off to a slow start.

By contrast, Moody’s credit rating agency recently upgraded the outlook for US airports from negative to stable as passengers begin taking to the skies again. Much depends on whether European countries can adopt a common approach to the acceptance of test and vaccination certificates, along with exemptions for vaccinated travellers. Yet if numbers from the third wave of the pandemic continue to head in the wrong direction, any agreement on travel documents may be rendered academic anyway.

With Wizz trading at 4,792p a share (Franke offloaded the shares at 5,200p), we think you should follow the chairman’s lead.