Rentokil Initial has sold parcels operator City Link to turnaround specialist Better Capital for £1.
The City Link management team, led by David Smith, will continue to run the business. Better Capital will invest £40m in the business to provide the funding required by City Link to complete its turn-around plan.
Smith was brought in from Royal Mail to turn the business around following heavy losses in 2010-11.
City Link reduced adjusted operating losses from £31m in 2011 to £26m in 2012. First Quarter 2013 performance continued to show an improved trading performance delivering an adjusted operating loss of £8.1m, an improvement of £4.6m against Q1 2012.
Alan Brown, Chief Executive of Rentokil Initial, said: “Rentokil Initial has decided to divest of City Link at this stage of the turnaround so that we can concentrate on our core international businesses in Pest, Hygiene and Workwear. The sale positions Rentokil Initial as a stronger and more focused group.”
“I believe City Link has now turned the corner after five years of substantial losses. The business has made strong financial progress over the last two quarters, it now has a strong management team and we have found a very committed investor in Better Capital.”
“Better Capital specialises in the provision of investment capital for the acquisition and turnaround of businesses, typically with a turnover of up to £500m.
It owns a number of well-known companies including high-end fashion group Jaeger, and office products distributor Spicers.
Smith said: “While in the short term it is business as usual, very quickly we will start to see the access to new capital, and the expertise Better bring to bear, accelerating the investment and improvements we are making in our customer experience.”