Mitie Mulls Takeover Bid for Main Interserve Unit, Sky Reports

(Bloomberg) -- Outsourcing company Mitie Group is considering acquiring the largest unit of Interserve Plc, the troubled U.K. construction company that collapsed this week and had its assets taken over by lenders.

Mitie’s chief executive officer, Phil Bentley, is working on plans to offer Interserve’s owners, which include a consortium of banks and hedge funds, about 100 million pounds for its support services unit, Sky News reported Saturday. This unit carries out facilities management work for government and various private sector clients in the U.K. and Middle East, Sky reported.

Mitie and Interserve didn’t comment on the report.

The talks come as Interserve Plc, which maintains hospitals and roads for the government, was formally placed under administration, a preliminary form of bankruptcy in the U.K., the company said in a statement Friday. The move followed the rejection by shareholders led by U.S. hedge fund Coltrane Asset Management of a rescue plan.

Final Collapse

Interserve had been in talks with lenders for months amid dwindling profits from construction and services units. Shares were suspended in London Friday after losing 96 percent of their value in just over two years.

If completed, the Mitie deal would create a company employing close to 100,000 people in the U.K., making it one of the country’s biggest private sector employers.

Interserve employs around 45,000 people, with the majority of them working in its support services unit. Mitie, based in Bristol, has around 56,000 employees.

The insolvency comes a little more than a year after the collapse of former rival Carillion Plc, whose liquidation cost almost 3,000 jobs and left 30,000 suppliers and subcontractors with 2 billion pounds in unpaid bills. Kier Plc, another construction and outsourcing firm, is revising its own net debt position.

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