London’s FTSE 100 was down 0.1% at 7,226.66 in afternoon trade on Tuesday.
Rentokil fell sharply after agreeing to buy US extermination firm Terminex in a stock and cash deal that values the business at roughly $7.6bn.
Russ Mould, investment director at AJ Bell, said: “The shares were up initially but soon traded lower as investors digested the information.
“The company is paying a fairly chunky premium, though a significant component is accounted for by its own shares.
“Those shares are worth a lot more after a strong run during the pandemic when Rentokil’s hygiene and cleaning expertise has been in strong demand.
“There are clearly big savings to be made around back-office functions and the uplift to earnings will be impressive. The promise of a stronger market position in the US is obviously exciting for shareholders but could also draw the ire of anti-trust regulators across the pond.
“The use of the word ‘transformational’ to describe the deal by Rentokil boss Andy Ransom may also be giving some investors pause for thought. It’s not hard to see the strategic rationale behind the move but so-called transformational deals often transform the purchaser’s prospects for the worse rather than the better.”
BT slumped after French telecoms giant Altice said it had increased its stake in the London-listed group to 18% and reiterated that it had no plans to stage a takeover under UK rules. Altice, owned by Patrick Drahi, bought a further 585.5m BT shares after building a 12% stake in June at a cost of £2.2bn – making it BT’s biggest shareholder.
Ocado jumped to the top of the index after the online supermarket group said it had won a patent infringement lawsuit filed by Norwegian robotics company AutoStore Holdings in the International Trade Commission.
The news came alongside Ocado’s fourth-quarter results, which showed revenue fell 3.9% year-on-year, as it felt the impact of labour shortages.
Miners BHP and Rio Tinto rallied as copper and aluminium prices rose.
FTSE 100 – Risers
Ocado Group (OCDO) 1,740.00p 9.37%
Coca-Cola HBC AG (CDI) (CCH) 2,473.00p 2.23%
British Land Company (BLND) 512.60p 1.91%
BHP Group (BHP) 2,166.00p 1.88%
London Stock Exchange Group (LSEG) 6,810.00p 1.85%
International Consolidated Airlines Group SA (CDI) (IAG) 132.68p 1.83%
Evraz (EVR) 603.40p 1.82%
Lloyds Banking Group (LLOY) 45.14p 1.77%
Rio Tinto (RIO) 4,825.50p 1.63%
CRH (CDI) (CRH) 3,826.00p 1.62%
FTSE 100 – Fallers
Rentokil Initial (RTO) 571.20p -8.52%
BT Group (BT.A) 165.20p -5.52%
Intertek Group (ITRK) 5,604.00p -2.54%
JD Sports Fashion (JD.) 210.60p -2.23%
Polymetal International (POLY) 1,264.50p -2.01%
Spirax-Sarco Engineering (SPX) 15,735.00p -1.96%
Aveva Group (AVV) 3,270.00p -1.89%
Ashtead Group (AHT) 6,120.00p -1.70%
SSE (SSE) 1,592.50p -1.67%
Hikma Pharmaceuticals (HIK) 2,202.00p -1.52%
