The break-up of troubled pest control group Rentokil Initial is expected to be rejected in a review of the services group due to be unveiled next week.

The company, based in East Grinstead, has suffered a turbulent period since May with the departure of its chairman and chief executive and a warning on profits.

But reports Rentokil was trying to sell its parcel delivery and conference services divisions appear to have come to nothing - for the time being at least.

Investors had expected the operations, worth an estimated £600 million, to be sold to enable Rentokil to focus on contract cleaning and pest control work.

But according to reports, chairman Brian McGowan will keep the door open to the sale of the parcel delivery and conference arms if future offers are attractive.

Rentokil is understood to have received a number of approaches for the two businesses but the decision to keep the group suggests it has failed to get the right price.

Mr McGowan announced the root-and-branch review after taking the helm from Sir Clive Thompson.

There were also rumours he planned to sell Rentokil's East Grinstead headquarters to cut all ties with his predecessor's ten-year tenure at the group.

One City analyst said the outcome of the review was likely to be a "damp squib" after Rentokil parted company with chief executive James Wilde last month.

A new boss would want control over the future direction of the group rather than a group in the middle of a strategic overhaul.

Selling the parcel delivery and conference businesses did not make sense at a time when prices were being squeezed in its core hygiene divisions from competitors and customers, he said.

He added: "If they are going to break the group up then they have got margins pressure in all core divisions. You would want to see some sort of operational stability first."

Rentokil, which provides pest control, security and other services in 40 countries, is expected to post annual pre-tax profits of not less than £350 million, compared with £408.5 million a year earlier.

The search for a new chief executive is taking place outside the firm. Mr McGowan is executive chairman in the interim.

Thursday August 19, 2004