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Rentokil bid threatens BET Plant Services

THE hostile bid launched by Rentokil for BET last week could lead to a change of ownership at the UKs largest plant hire group, BET Plant Services.

If the 1.8 billion bid succeeds, Rentokil may recoup part of the outlay by an early sale of BETs plant interests, analysts believe.

A Rentokil spokesman said it was too early to comment on disposals. But he added that the firm would would want to focus on areas where there was a considerable overlap with our existing interests which do not include plant hire.

Charles Pick, analyst at stockbroker Panmure Gordon, said Rentokil would probably prefer to do without BETs plant hire companies. But he warns that this doesnt make an early sale following any takeover automatic. In the short time Rentokil could well hang on to the plant companies to see if it they can improve profitabity, he said.

BETs Plant Services division reported a 28 per cent jump in operating profits to 27 million in the half ending in September, largely due to an improved performance by its US business.

But the head of the divison warned that over-capacity in the sector was made worse by excessive investment by rivals.

BET has been reducing capacity in commodity items such as cranes, portable accomodation and scaffoldings.

In November the head of the division warned: For the next couple of years I dont think the UK is the place to put plant hire money.

Rentokil is known for low-margin services ranging from pest control to tropical plant servicing. It is a City favourite, having increasing earnings by 20 per cent over the past 13 years. It accused BET management of having demonstrably failed to enhance shareholder value.

BET has revived its performance in recent years after a difficult recession. It said Rentokils bid was a muddled plan to create an unfocused conglomerate.