Mitie, the FTSE 250 facilities management company, has agreed to a £3.1bn takeover by rival OCS, marking another London-listed firm acquired by a private purchaser at a substantial premium.
Deal Details and Premium
OCS will pay 221.6p in cash per Mitie share, comprising 218.5p per share plus a final dividend of up to 3.1p. The offer represents a 44.7% premium to Mitie's closing share price on 20 July. Mitie's board unanimously recommends the deal, calling it "fair and reasonable."
Chris Rogers, chairman of Mitie, said: "The board believes OCS's offer recognises the strength of the business, the progress achieved in recent years and the opportunities ahead. Having carefully reviewed the offer, the board has unanimously concluded that it represents an attractive outcome for shareholders, delivering the certainty of cash consideration."
Market Reaction and Context
Mitie's share price surged 40.5% in early trading to 212.2p, lifting the stock 28.4% higher since January. The transaction follows engineering business Rotork's removal from the mid-cap index last week in a £4.1bn deal at a 73% premium.
Private equity houses and corporations have also targeted blue-chip mainstays. Insurer Beazley was acquired by Zurich for £8.1bn at a 59.8% premium, while Nuveen captured Schroders for £9.9bn at a 34% premium.
Impact on London Market
These transactions, coupled with an IPO drought, are diminishing the London market. Just seven flotations occurred during the first half of the year, generating £577.2m. The aggregate market capitalisation of the new listings reached merely £2.2bn, according to figures from Peel Hunt.
Peel Hunt's chief executive urged the Government to take greater action to halt the trend last week following the Rotork takeover, contending it is undermining the "UK's tax base and growth prospects." Writing on LinkedIn, Fine said: "The equity market is a strategic national asset. When companies list elsewhere or are acquired and disappear from the market, the impact extends far beyond stamp duty."
