- Price represents 26% premium
- Marlowe a good fit for Mitie
- Mitie buyback cancelled
With its core business going from strength to strength, FTSE 250 facilities management group Mitie Group (MTO) revealed today (5 June) it had made a cash and shares offer for fire safety specialist Marlowe (MRL:AIM).
Having jumped nearly 40p or 10% to 406p yesterday as rumours of a deal swirled around the market, Marlowe shares added another 30p or 7% to 436p on today’s confirmation.
Mitie shares on the other hand dropped 18p or 11% to 142p after the firm announced it was cancelling its buyback in order to part-fund the deal.
RECOMMENDED OFFER
In what looks to be a well-timed, if not to say opportunistic approach, given the performance of their respective share prices year-to-date, Mitie is offering Marlowe investors 1.1 new Mitie shares plus 290p in cash, which based on last night’s closing price of 160p for Mitie implies a value of 466p per Marlowe share.
That represents a 26% premium to the Marlowe share price on Tuesday (3 June), the day before any market speculation of a deal, and a 39% premium to the price over the previous three months.
The Marlowe board has recommended the offer to its shareholders, of which the biggest is former Conservative Party treasurer and current non-executive chairman of Marlowe, Lord Ashcroft, who holds a near-19% stake.
Other major shareholders include Slater Investments, Octopus Investments, Cannacord Genuity Wealth and former Marlowe chief executive Alex Dacre with just under 6% each of the shares.
Lord Ashcroft commented: ‘The acquisition represents excellent value for Marlowe shareholders and provides an opportunity to participate in potential further value accretion through the new Mitie shares which will be issued.
‘Together, the acquisition, the dividend of shares in Optima Health on demerger at a value of 210p per share in September 2024, and the 155p special dividend paid in July 2024, represent a total value of 831p per Marlowe share based on Mitie’s share price on 4 June 2025.’
For his part, Mitie chief executive Phil Bentley commented: ‘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 c.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.’
STRONG FOUNDATIONS
Alongside the offer for Marlowe, Mitie presented its results for the year to the end of March, showing a 13% rise in revenue to just over £5 billion, with organic growth of 9% thanks to new contract wins, scope increases, better pricing and projects upsell.
Over the 12 months, the firm won a record £7.5 billion in total contracts, a 21% increase on the previous period, thanks to wins, renewals and extensions.
That took the total order book to £15.4 billion, an increase of 35% and another company record, representing a 1.5 times book-to-bill ratio.
‘FY25 was a year of good financial and operational progress for Mitie, as we embarked on our new Three-Year Plan for Facilities Transformation,’ said the chief executive.
‘Our mission is clear - to transform our customers’ estates and create smarter, safer, cleaner and greener places that are not only fit for today but are ‘future-proofed’ for the rapid changes that will come in the next few years. We are the future of high-performing places.’
