CMA clears Interserve FM sale

Mitie’s acquisition of Interserve FM is expected to complete at the end of the month

Having secured clearance from the government’s competition watchdog, Mitie said that the £190m acquisition was now expected to complete on 30th November, subject to shareholder approval.

Mitie shareholders meet to vote on the deal on 23rd November 2020.

Mitie announced in June 2020 that it had signed a sale and purchase agreement to acquire Interserve Facilities Management for £271m, comprising £120m in cash and the balance in Mitie shares – 358 million shares in the newly enlarged Mitie  representing approximately 23.4% of enlarged group share capital.

The deal was then revised. Earlier this month it was agreed that Interserve’s owners will only get 248 million Mitie shares along with their £120m cash. This values the transaction at £190m rather than the previous £271m and gives the banks that own Interserve a 17.5% slice of Mitie instead of 23.4%.

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Mitie today posted a pre-tax profit of £2.1m from continuing operations for the six months to 30th September 2020, down from £14.6m for the same period last year. It lost £3.3m on its discontinued catering  business and spent £8m on restructuring.

Chief executive Phil Bentley said: “Our financial performance in the first six months of the year proved more resilient than expected with a much improved second quarter.  Revenue of £972m was 9.8% lower than the prior year as discretionary variable works and engineering projects significantly reduced offset partially by growth in Business Services.  Operating profit of £21.5m benefitted from management action to reduce costs at the start of the crisis.

“With Covid-19 changing the way we work our industry-leading technology of remote monitoring, risk analytics, and deep cleaning has created opportunities to win some important new customers, including Marks & Spencer, Morrisons and Royal London which are included within the £500m worth of new or renewed contracts in the period.

“Strategically we continue to make good progress against our Phase 11 transformation, ‘Accelerated Value Creation’. Strengthening our balance sheet with the rights issue and refinancing of the revolving credit facility in June placed us in a strong financial position to acquire Interserve Facilities Management.  With completion of this acquisition at the end of the month – subject to shareholder approval – we can drive faster growth and greater cost synergies, despite the challenges of Covid-19.” 

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