After initially receiving garlands from the market with a rising share price, investors quickly became more circumspect on hygiene services and pest control firm Rentokil’s (RTO) $6.7 billion deal for US rival Terminix.

While the strategic logic of the deal is clear, creating a global market leader with a particularly strong footprint in the US and with annual cost synergies of $150 million identified, Rentokil CEO’s Andy Ransom’s use of the word ‘transformational’ to describe the deal could make him a hostage to fortune.

So-called transformational deals have a track record historically of destroying as much shareholder value as they create.

Also, the combined entity could attract the attention of US competition regulators – something Rentokil experienced in the UK with its acquisition of Cannon Hygiene and Mitie’s (MTO) pest control unit.

This raises the prospect of a protracted transaction which diverts management resource and time away from the day-to-day running of the business.

The deal for Terminix is structured so Rentokil will pay around $1.3 billion in cash and the rest in its own stock, which carries greater weight after a 20% advance for the shares in the last 12 months. Rentokil has benefited from strong demand for its hygiene and cleaning expertise during the pandemic.

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