(Reuters) - Mitie Group MTO.L will now issue 31% fewer shares to buy rival Interserve's support services arm, lowering the value of the cash-and-share deal to 190 million pounds, the British outsourcer said on Wednesday.
The company amended the deal announced in June by 110 million shares, while the cash part of the offer remains unchanged at 120 million pounds. Mitie’s existing shareholders will now hold 82.5% of the combined group, the company said.
“Mitie, in particular, has been successful at renewing strategic contracts and winning new business during this period (COVID crisis). Recognising this momentum, we have renegotiated the terms of the ... transaction,” Mitie Chief Executive Officer Phil Bentley said.
The company’s shares were up 6.4% in early trading.
Jefferies analysts said that the reduction in the deal cost was an “unscheduled positive”, and higher cost synergies from the deal should boost accretion to Mitie’s earnings from 20% to 30% in fiscal 2022.
In a separate announcement, the provider of engineering, security, cleaning and care services, said its second-quarter revenue was up 12% sequentially, adding that contracts worth 500 million pounds were renewed or won in the first half of fiscal 2021.
About a quarter of that amount was directly attributable to demand due to the pandemic, Mitie said.
The company said the Interserve deal is expected to complete at the end of this month after shareholders give it a go-ahead and clearance from the British competition regulator following its investigation.
Reporting by Pushkala Aripaka in Bengaluru; Editing by Shailesh Kuber
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