LONDON (ShareCast) - (Sharecast News) - Outsourcer Mitie said on Thursday that it has agreed to buy AIM-listed Marlowe in a £366m deal.
Under the terms of the acquisition, Mitie will pay 1.1 in new Mitie shares and 290p per share in cash, representing a total implied value of 466p a share.

This is a premium of about 26.5% to the closing Marlowe share price on Tuesday, which was the last day before market speculation of an approach.

Mitie chief executive Phil Bentley said: "Mitie has transformed its business over the past eight years, disposing of businesses where it could not build a leading position and adding scale through the acquisitions of VSG and Interserve to become the UK's leading Facilities Management company. Since then, acquisitions to add Projects capabilities in Power & Grid Connections, Renewable Energy, Data Centres, Fire & Security and Sustainability have pivoted the business to become the UK's leading Facilities Transformation company.

"With growing legislation around Fire, Security and Water & Air Quality, our clients need a partner who can also offer a broad range of Facilities Compliance capabilities. In a growing Testing, Inspection and Certification (TIC) market valued at £7.6 billion per annum, Marlowe stands out as a leader in Fire & Security and Water & Air and Asbestos compliance.

"Adding Marlowe's circa 3,000 highly respected colleagues to Mitie's capabilities and providing access to Mitie's clients will generate significant revenue growth opportunities as well as immediate cost efficiencies. We are excited about the next chapter in Mitie's history to become a leading Facilities Compliance provider."

News of the acquisition came alongside Mitie's results for the year to the end of March, which showed that operating profit operating profit before other items rose to £234.1m from £210.2m the year before.

Revenue jumped 13% to £5.1bn and the total order book grew 35% to a record £15.4bn.

At 0830 BST, Mitie shares were down 9.4% at 144.60p, while Marlowe shares were 7.9% higher at 438.12p.

Russ Mould, investment director at AJ Bell, said: "Mitie has been on quite a run of late, with the shares having tripled over the past three years thanks to momentum in the business including record contract wins and higher pricing. Earnings continued to beat expectations and the client roster continued to grow, doing work for the likes of British Airways, Aldi, Lidl, the Ministry of Justice and Lloyds, among others.

"While it is still early days for a new strategic plan, the progress so far looks encouraging. Bigger acquisitions are now in motion with a takeover bid for AIM-quoted Marlowe, a buy and build company that's carved a niche in the non-discretionary side of facilities management. Marlowe does safety-related work around fire, water and air quality, and Mitie looks to be an ideal owner for the group.

"The pullback in Mitie's share price on the results and acquisition announcement might simply be down to profit taking by shareholders. Certain investors often believe it is better to travel than arrive, so a set of results after a strong rally for a stock can be the trigger to get out while the going is good."

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