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Interserve and Mitie propose merger to create UK’s leading FM business

13 July 2020

Mitie PLC has announced the proposed merger of Interserve Support Services with Mitie for a combined consideration of £271million, comprising £120m in cash and a 23.4% shareholding in Mitie to be held by or on behalf of Interserve’s shareholders.

Interserve Support Services is comprised of the company’s facilities management operations in the UK and overseas across both public and private sectors.

Completion of the transaction is subject to certain conditions, including approval from Mitie’s shareholders. Should these conditions be satisfied within the expected timeframe, the merger of Interserve Support Services is expected to complete by the end of this year. Mitie will also be engaging with the CMA as part of the merger process.

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 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 and Equipment Services (RMD Kwikform) and Citizen Services. Alan Lovell will continue to lead Interserve Group as chairman, supported by Mark Morris, executive director and chief financial officer.

Interserve Construction Limited will continue to be chaired by Nick Pollard, supported by managing director Paul Gandy. The Group’s Equipment Services division, RMD Kwikform, will continue to be led by its chairman Ken Hanna and Ian Hayes as managing director. The Group’s Citizen Services division, comprising of Interserve Healthcare, Interserve Learning & Employment (ILE) and the company’s Community Rehabilitation Companies that deliver rehabilitative services to low and medium risk offenders. This division, previously part of Interserve Support Services, is not included in the transaction and will continue to be managed by Ian Mulholland.

Employing over 3000 people, the division will continue to execute its growth strategy for the Health and ILE businesses, and will support the Ministry of Justice to successfully transfer probation services back to them on expiry of the current contracts in June 2021.

Alan Lovell, chairman of Interserve Group (pictured) said: “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.”

Lazard is acting as sole financial advisor to Interserve Group Limited in respect of the transaction, and Slaughter and May is acting as legal counsel.