Rentokil's Bold Pivot: How Strategic Divestment is Reshaping the Safety Workwear Landscape

The global safety workwear market is undergoing a seismic shift, driven by consolidation and capital reallocation—a trend crystallized by Rentokil Initial's recent decision to sell its French workwear division to HIG Capital. Valued at a gross enterprise value of €410 million (with an earn-out mechanism potentially boosting it to €440 million), this transaction underscores a broader industry strategy: shedding non-core assets to focus on high-growth sectors. For investors, this is more than a corporate reshuffle—it's a signal of where capital is flowing and where opportunities lie.

The Deal's Strategic Brilliance
Rentokil's move to offload its French workwear business, which includes uniforms, flat linen, and clean room operations, is a textbook example of capital reallocation. By divesting a unit valued at €370 million net, the company will redirect resources to its core pest control and hygiene businesses, which now account for 80% and 20% of revenue, respectively. This sharp focus aligns with a sector-wide trend: pest control and hygiene services are growing at a faster clip than workwear, driven by urbanization, regulatory compliance, and consumer demand for safety.

The transaction's structure—featuring an earn-out tied to 2026 performance—also reflects HIG Capital's confidence in the unit's long-term value. For Rentokil, this flexibility ensures it isn't overexposed to post-sale risks while still benefiting from upside potential.

Sector Consolidation: A Wave, Not a Ripple
Rentokil isn't acting in isolation. Across industries, companies are redefining their portfolios to prioritize core competencies. In safety workwear, consolidation has accelerated as buyers like HIG Capital seek scale and operational efficiency. Consider the broader market: the global safety workwear sector is projected to grow at a 6% CAGR through 2030, driven by rising labor costs, stricter occupational safety laws, and demand for PPE in sectors like healthcare and manufacturing.

Yet this growth is uneven. Companies with niche expertise—such as workwear providers catering to high-margin industries—are outperforming broad-based players. Rentokil's decision to exit its French workwear division, while retaining its hygiene and pest control businesses, positions it to capitalize on these high-margin opportunities.

The Capital Reallocation Playbook
The €370 million in proceeds from this sale isn't just a windfall—it's a catalyst for strategic reinvestment. Rentokil has signaled it will use the capital for “bolt-on mergers and acquisitions” in its core segments. This aligns with a key investment thesis: companies that redeploy capital into high-growth areas outperform peers.

Consider the pest control market: it's a $20 billion industry with steady demand, and Rentokil's dominant position in Europe and North America offers a robust platform for expansion. Meanwhile, hygiene services, which include sanitation and disinfection, are surging post-pandemic. By doubling down here, Rentokil could achieve double-digit revenue growth while maintaining pricing power.

Why This Matters for Investors
Rentokil's pivot isn't just about cutting losses—it's a bet on the future. By jettisoning a mature, lower-margin business (workwear) for higher-growth segments, the company is aligning itself with investors' demands for capital efficiency. This move also sends a clear message: the safety workwear sector is bifurcating into two camps—those focused on scale and cost-cutting, and those targeting high-margin niches.

For investors, the takeaway is straightforward: follow the capital. Companies like Rentokil, which can divest non-core assets and reinvest in high-growth areas, are the ones likely to outperform. The French workwear sale isn't an exit from the sector but a strategic reallocation—one that could fuel returns for years.

Final Take: Act Now or Miss the Boat
The clock is ticking. With the transaction expected to close in Q4 2025, investors should assess Rentokil's valuation and growth trajectory now. The company's focus on pest control and hygiene, paired with a strengthened balance sheet, creates a compelling entry point. Meanwhile, the safety workwear sector's consolidation wave is only beginning—those who act decisively will secure the best positions in this evolving landscape.

Don't let this opportunity slip through your fingers. The time to act is now.