Two of Britain’s biggest government contractors are merging their struggling facilities management arms in a deal that will create a business employing 77,500 people in the UK.
Mitie has raised £201m in a fully underwritten rights issue to buy Interserve’s facilities management division for £271m to help offset the impact of the Covid-19 crisis.
The deal will hand investors in Interserve, which is owned by its lenders, £120m in cash plus shares equal to a 23.4 per cent stake in Mitie. Around 600 jobs will be cut as a result of the deal, which still requires approval.
The merger will create one of the largest facilities management businesses in the UK, with combined revenue of £3.5bn and work that ranges from cleaning prisons and the London Underground to changing lightbulbs at Ministry of Defence facilities. Mitie’s share price rose 7 per cent to 85.7p in morning trading on Thursday.