Pest control company Rentokil Initial Plc (NYSE:RTO) shares are trading higher after activist investor Nelson Peltz's Trian Fund Management LP has reportedly increased its stake, making it one of the top ten shareholders of the U.K.-based company.

This move has notably revived Rentokil's shares, which had previously suffered due to a post-COVID market slump.

As of mid-morning trading in London, the company's shares were up by about 12%, valuing Rentokil at approximately £11.8 billion ($15 billion), reported Bloomberg.

This boost comes after a challenging year where Rentokil's stock value declined significantly, affected by reduced demand in the post-pandemic period, the report highligted.

During the pandemic, Rentokil experienced a surge in business as increased hygiene awareness led to heightened demand for pest control services.

However, as the situation normalized, the company faced a downturn, partly due to the resumption of travel, which briefly increased demand due to concerns over bed bugs in hotels.

Trian's acquisition is part of a broader strategy that has seen the firm take significant positions in other major companies, including Unilever Plc (NYSE:UL) and Ferguson Plc (NYSE:FERG).

Notably, Trian's involvement often precedes major strategic shifts aimed at enhancing shareholder value, as seen in its push for Ferguson's re-listing in New York, which led to a substantial increase in its stock price.

With a significant portion of its revenue coming from North America, Rentokil's current valuation stands at about 17 times its 12-month forward earnings, per the report.

This is considerably lower compared to its U.S. peers, indicating a potential undervaluation issue that Trian might address.

Price Action: RTO shares are trading higher by 13.1% at $30.44 in premarket at the last check Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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