A MERGER between Mitie PLC and Interserve Support Services has been proposed for a combined consideration of £271m.
The merger would comprise of £120m in cash and a 23.4% shareholding in Mitie to be held by or on behalf of Interserve’s shareholders.
Interserve Support Services consists of the company’s facilities management operations in the UK and overseas across both public and private sectors, while Mitie offers strategic outsourcing and energy services.
Alan Lovell, Chairman of Interserve Group Limited, commented on the news: “The proposed combination of Interserve Support Services with Mitie will create the UK’s leading facilities management company, with strong prospects in both the public and private sectors providing significant opportunities to employees, customers, and shareholders alike.
“The transaction, which is consistent with our stated strategy of realising value for our shareholders, will reduce the Group’s debts, enable a paydown to our shareholders and stabilise the Group’s financial position through a retention of a proportion of the proceeds.
“It will leave Interserve as a focused Group executing clear business plans in Interserve Construction Limited and RMD Kwikform, as well as our Citizen Services portfolio of businesses.
“Interserve Group Limited see significant opportunities for these businesses in their respective markets, which we will continue to pursue with a high level of discipline.”
Completion of the transaction is subject to certain conditions, including approval from Mitie’s shareholders.
Should these conditions be satisfied within the expected time frame, the merger of Interserve Support Services is expected to complete by the end of this year.
An Interserve spokesperson commented: “Interserve and Mitie are both leaders of the UK FM outsourcing industry.
“The combined organisation will be evenly balanced between the public and private sectors and will be the largest facilities management company in the UK, employing over 77,500 people.
“The Board of Interserve Group Limited believes that the proposed transaction creates a larger and stronger UK FM business and is highly attractive to its stakeholders, including its employees, customers, partners and shareholders.
“Following completion of the transaction, Interserve Group Limited will continue to focus on delivering its business plans for its three remaining divisions, Construction, Interserve Construction Limited and Equipment Services (RMD Kwikform) and Citizen Services.
“Alan Lovell will continue to lead Interserve Group Limited as Chairman, supported by Mark Morris, Executive Director and Chief Financial Officer.”
The Group’s Citizen Services division, which consists of Interserve Healthcare, Interserve Learning & Employment (ILE) and the company’s Community Rehabilitation Companies that deliver rehabilitative services to low and medium risk offenders, is not included in the transaction and will continue to be managed by Ian Mulholland.
Lazard is acting as sole financial adviser to Interserve Group Limited in respect of the transaction, and Slaughter and May is acting as legal counsel.
Mitie will also be engaging with the Competition and Markets Authority as part of the merger process.
