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Mitie-Interserve deal creates outsourced services giant

August 2020

Two of the UK's biggest government outsourcers have agreed to merge their support services arms, creating a business employing almost 80,000.  Mitie Group is set to acquire the facilities management arm of rival Interserve for £271 million.  The deal will help Mitie gain scale in the UK's huge outsourcing industry at a time when others are struggling to cope with the coronavirus crisis. Both firms serve clients such as the NHS and the Ministry of Defence.

The deal comes at a time when the government is relying heavily on outsourced services providers in its response to the coronavirus crisis.  Both Mitie and Interserve are involved with the NHS Nightingale hospitals, built specially to treat Covid-19 patients, while Mitie has been hired to run 11 Covid-19 drive-in regional testing centres.

Mitie said the deal would help it to cut costs at a time when clients are cutting back on discretionary spending.  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."

For Interserve, the merger gives it a chance to pay down its debts, give cash to its shareholders and stabilise its finances.  The firm, which runs Ministry of Defence training centres and cleaning contracts for Network Rail, has been trying to turn itself around after being rescued from administration last year.

 

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