Rentokil boss 'set to spark leadership battle'

Former Granada boss Sir Gerry Robinson is to spark a leadership battle at Rentokil Initial by calling on shareholders to let him run the firm.

Reports today said Sir Gerry will use the support of Rentokil’s biggest investor to bring about an extraordinary general meeting, when the future of the group’s chairman and chief executive will be put to the vote.

That could led to the appointment of Sir Gerry as executive chairman of the pest control to washroom services conglomerate, which is battling to revive its performance after a period of sliding sales and profits.

The call for an EGM will be made instead of an outright takeover bid worth £3bn (€4.4bn) by Sir Gerry’s investment vehicle Raphoe Management – set up with the purpose of turning around under-performing companies.

Raphoe has until midday tomorrow to announce whether it wants to make an offer, otherwise it will have to abandon plans for at least six months.

Instead, Franklin Templeton, the US fund manager and supporter of Sir Gerry’s plans, will use its position as owner of 14.7% Rentokil shares to call for an EGM to install the former Allied Domecq boss as executive chairman.

That would be a blow to Doug Flynn, who only took up the job eight months ago and recently came up with his own plan for reviving the business. He is joined at the helm by chairman Brian McGowan.

Mr Flynn recently revealed that Rentokil was too introspective and focused on short-term goals, warning that operational costs had been squeezed to such an extent that quality of service had suffered.

His immediate attention has been focused on pest control and washroom and textiles, which he believed offered the best platform for growth.

The strategy will be the centrepiece of the board’s defence, although it is also likely to point to the stock awards that could be granted to Sir Gerry.

The Sunday Telegraph said that in exchange for his commitment to be chairman for between three and five years, Sir Gerry will call for grants of shares representing about 2.5% of Rentokil’s equity, worth about £70m (€103m).

Some bankers are thought to believe that shareholders are more likely to back Sir Gerry if he agrees to link the grants to performance targets.