Pest control-to-hygiene firm Rentokil Initial has agreed a mammoth 6.7 billion US dollar (£5.1 billion) deal to buy an American rival in a move that will see it become the biggest firm in the market worldwide.

Rentokil shares hit a record high at one stage before edging 4% lower after it announced the cash-and-shares takeover of Terminix Global Holdings.

The tie-up will boost Rentokil to become the global leader in the pest control industry, hygiene and wellbeing sector, and the leader in the North American pest control business.

Rentokil will have around 56,000 employees, 4.9 million customers and 790 sites worldwide following the deal, which is expected to complete in the second half of next year.

It expects to drive cost savings of at least 150 million US dollars (£114 million) after the acquisition across administration departments, IT and marketing, as well as by merging branches, which is set to involve some global job losses.

But Rentokil said while some overlapping roles will be slashed, the bulk of the job cuts will come from not replacing those who leave over time.

They are also expected to be outside of the UK, as Terminix has agreed to sell its British operations before the deal closes to ease any competition fears.

Chief executive Andy Ransom will continue to lead the combined group, with chairman Richard Solomons also retaining the same role.

Mr Ransom said: “This is a win-win-win for colleagues, customers and shareholders.”

It sees Rentokil take a bigger slice of the 22 billion US dollar (£16.6 billion) global pest control industry and of the all-important US market, which represents 51% of the worldwide sector.

Together, the firms will have an estimated £4.3 billion in annual sales.

Terminix’s shareholders will own about 26% of the combined group.