Mitie deal to buy Interserve arm put under microscope by competition watchdog

Outsourcer Mitie’s £271 million deal to buy rival Interserve’s facilities management arm is being scrutinised by Britain’s competition watchdog.

The Competition and Markets Authority (CMA) said it was considering whether the deal could lead to a lessening of competition in the market.

It is inviting comments on the tie-up, with a deadline set of September 29.

Mitie announced the deal in June, which would create what the companies say is the biggest facilities management expert in the UK, with more than 77,500 employees.

The deal would leave Interserve shareholders with a cheque for £120 million in cash, and a 23.4% stake in Mitie itself.

Mitie, meanwhile, will get a business with a strong presence in the government and defence sector, and said it will be able to save costs by combining the businesses.

For Interserve, it believes the deal gives it a chance to pay down its debts, give cash to its shareholders and stabilise its finances.

Already a holder of government contracts, Mitie has won several more in the fight against coronavirus.

It has helped out in the Nightingale Hospitals and provided support to 11 drive-in coronavirus testing centres across the country.

The company has also picked up several deals to help supermarkets and online retailers through the tough period as they were forced to make sweeping changes to their supply chains.

Mitie revealed that revenue had grown by 4.2% in the year to the end of March, while pre-tax profit from continuing operations increased 73% to £48.4 million.

However, the start of this financial year has been tougher, with revenue dropping 12% and profit down by a fifth in the first two months.