Mitie's revenues were down by 12% in April and May, compared to 2019 © Mitie
Mitie's revenues were down by 12% in April and May, compared to 2019 © Mitie

Mitie-Interserve merger to save £30m

posted by Charlie Hart
25 June 2020

Mitie has bought rival Interserve’s facilities management arm in £271m deal that aims to scale its position in both the private and public sector.

The merger is expected to create synergies of £30m by the end of the merger’s second year, Mitie said. 

The combined organisation, which will be evenly balanced between the public and private sectors, will be the largest facilities management company in the UK, employing almost 80,000 people.

Mitie group chief executive Phil Bentley said: “This will be a transformative acquisition, expanding the scale and footprint of our business to create the UK's largest facilities management company and accelerate the delivery of Mitie's long-term technology-led vision.

“The transaction will better balance our public and private sector divisions, driving greater returns from the investments we have made in technology and customer service over the past three years.”

Both firms serve clients including the Ministry of Defence and Network Rail. They were also contracted to work on the NHS Nightingale Hospitals built to treat coronavirus patients. 

Completion of the transaction is subject to conditions, including approval from Mitie’s shareholders. Mitie will also be engaging with the Competition and Markets Authority as part of the merger process. 

Mitie’s business has proven to be more resilient to the impact Covid-19 than initially expected, it said. Revenues were down by just 12% in April and May this year in comparison to the same period in 2019.

Earlier this year, Interserve entered into administration after failing to secure investor backing on a rescue plan. 

Alan Lovell, chairman of Interserve Group, said the merger would “reduce [Interserve’s] debts, enable a paydown to our shareholders and stabilise the group’s financial position”.

“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.”

 Want to stay up to date with the news? Sign up to our daily bulletin.

CIPS Knowledge
Find out more with CIPS Knowledge:
  • best practice insights
  • guidance
  • tools and templates