The proposed 80 per cent stock and 20 per cent cash transaction represents a 47 per cent premium on Terminix's closing share price yesterday (December 13).
On completion, the combined entity will employ some 56,000 people serving around 4.9 million customers around the world from 790 locations.
For the year ended 31 December 2020, the combined group's pro forma revenue would have amounted to US$5.7 billion (£4.3 billion), with EBITDA of US$1.2 billion (£897 million) and Free Cash Flow of US $608 million (£458 million).
Commenting on the announcement, Rentokil Initial Chairman, Richard Solomons, said: "The Board of Rentokil Initial and I are delighted to recommend this transformational combination which will create the global leader in Pest Control and Hygiene & Wellbeing. Under Andy Ransom's leadership, our Combined Group will have a highly talented and experienced management team able to more effectively create value and enhance long-term growth.
"We believe the combination is a compelling opportunity for all stakeholders to participate in the value creation of the Combined Group."
Brett Ponton, Terminix CEO, added: "This is an exciting next step that significantly advances Terminix's journey toward becoming a global leader in pest management.
"As part of a larger and stronger organization, we will offer superior service and an even more comprehensive range of solutions for our customers, while accelerating our investments in growth and technology.
"Leveraging our strong combined residential and commercial capabilities and enhanced customer density will improve the quality of service we provide long into the future."
Both companies have recommended the agreement to their shareholders, with the deal expected to complete in the second half of 2022, subject to regulatory approval.
