The Historical Purchase

payment for Orkin

In 1964, O. Wayne Rollins, founder of Rollins Broadcasting (second from left), presents the check for the purchase of Orkin to Sanford Orkin (second from right).

When Rollins Broadcasting purchased Orkin Exterminating Company in September 1964 for $62.4 million, BusinessWeek magazine compared the transaction to “Jonah swallowing the whale.” At the time, Rollins Broadcasting reported revenues of $9.1 million with net income of $894,000, while Orkin reported revenues of $37.3 million and net profits of $3 million.

The deal was unique at the time, because it was based on Orkin’s potential earnings, rather than its current assets. Rollins Broadcasting was also smaller in comparison to Orkin, making it risky to purchase as well.

The sale was the first recorded leveraged buyout in the U.S. Rollins Broadcasting borrowed $60 million, including $10 million from the sellers, and used $2.4 million of Orkin’s excess cash to close the transaction. Rollins Broadcasting also borrowed $20 million, including $10 million at 4.5 percent interest for 15 years from the Orkin family, with payments deferred for four years. The $10 million of Rollins Broadcasting’s assets helped support the transaction.

The deal cemented Wayne Rollins’ reputation as a visionary businessman, as he was confident that the deal would become profitable after the purchase. The historical transaction later became a case study at Harvard University’s Business School. While Orkin was widely recognized as a successful company, Wayne saw the potential for even greater growth in the company and pest management industry. Although Orkin was successful before the acquisition by Rollins Broadcasting, Orkin grew exponentially after the purchase.