The two stage break up of Marlowe PLC

And where might Mitie buy next?

Dear Rainmakers,

There are lots of different ways to extract value from a complex buy and build.

This week Robert Buckland takes a look at the deal that landed this morning for outsourcing giant Mitie to buy its smaller rival Marlowe for £366m, as it looks to fire and security expertise to its range of key sector specialisms.

Mitie, which was launched in Bristol in 1987 and today employs 76,000 people working in areas ranging from cleaning and security to maintenance, said the recommended cash and share offer would help it become the UK’s leading ‘facilities transformation’ company.

It would also deliver £30m of cost synergies, said Mitie in comments accompanying its results for the year to 31 March that show pre-tax profits falling by 7% to £145.4 on revenue up 13% at £5bn.

During that period Mitie, now headquartered in London, embarked on a three-year plan to change the business from being a UK leader in ‘facilities management’ to a leader in technology-led and data-driven ‘facilities transformation’.

It said this would transform the built environment and the lived experience, through projects and bringing insights and better decision-making for its clients through leading data analytics capabilities.

The acquisition of London-headquartered Marlowe was part of this switch, the firm said, adding that the move boosted its currently limited range of testing, inspection & certification (TIC) services.

The whole deal also looks like the second phase of the two stage dismantling of Marlowe, and a fascinating route towards extracting the best price for the sprawling services conglomerate.