News of deal comes as firm posts 68% fall in full-year profit, with group revenue up 8% to 拢2.6bn
Interserve has struck a deal to buy Rentokil鈥檚 facility services business for 拢250m, in a move that would make the construction group one of the UK鈥檚 top three facilities maintenance firms by turnover.
The deal was announced as Interserve reported its full-year results this week, with pre-tax profit falling 62% to 拢68m, down from 拢180m the previous year.
Excluding 拢13m in finance costs and exceptional items related to asset disposals, pre-tax profit rose to 拢81m.
Interserve said it would fund the takeover of Rentokil鈥檚 Initial Facilities, which is conditional on shareholder approval, with a 拢70m share placing, equivalent to around 10% of existing shares, and debt.
Initial Facilities employs around 25,000 people across the UK, Ireland and Spain and posted 拢542m in revenue last year.
Adrian Ringrose, Interserve chief executive said: 鈥淲e believe that this acquisition will deliver significant strategic progress in growing one of our core businesses.
鈥淭he breadth and fit of the services we will now be able to offer, added to the advantages of increased scale and potential synergies, will create a compelling proposition, leaving us well placed for future growth.鈥�
Interserve said it would hold a general meeting for shareholder to vote on the takeover on 17 March.
In its results for the year to 31 December 2013, Interserve posted group revenue, including share of joint ventures, of 拢2.6bn, up 8% from 拢2.4bn in 2012.
Excluding 拢13m in finance costs and exceptional items related to asset disposals, pre-tax profit rose to 拢81m.
The firm鈥檚 UK construction business posted revenue of 拢802m, up from 拢737m in 2012, with operating profit of 拢14.7m, up marginally on 拢14.6m the previous year.
This gave the UK construction business an operating margin of 1.8%, down slightly on 2% last year.
Internationally construction posted revenue of 拢216m, up from 拢202m, with an operating profit of 拢13.1m, down from 拢14.3m the previous year, and an operating margin of 5.1%.
The firm said its construction businesses, in both the UK and the Middle East, 鈥渉ave performed well, showing continued resilience in the face of difficult economic conditions鈥�.
鈥淯K construction again performed well, showing continued resilience amid challenging market conditions.
鈥淎gainst a backdrop of subdued major infrastructure activity, our strategy of nurturing repeat business on key accounts and selectively diversifying into new sectors yielded increased revenue.鈥�
The firm said its future workload remained stable at 拢1bn (2012: 拢900m), with the firm benefitting from 鈥渁 mixture of new and existing frameworks, and from selective opportunities in the private sector鈥�.
The firm鈥檚 UK support services business reported revenue of 拢1.2bn, up from 拢1.1bn in 2012, with an operating profit up 26% to 拢56m, up from 拢44.3m.
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