Mitie, Interserve deal on UK competition watchdog's radar

(Reuters) - Britain's competition regulator is investigating whether a deal between outsourcing firms Mitie Group MTO.L and Interserve for the latter's facilities business could reduce competition in the sector.

The Competition and Markets Authority (CMA) said on Tuesday it was inviting interested parties to offer their comments before Sept. 29 on the agreement, which was announced by Mitie in June.

“The transaction was voluntarily referred to the CMA for clearance and we are working closely with the CMA to progress the process,” a spokesperson for Mitie said in an e-mailed statement. Interserve declined to comment.

The 271-million-pound deal ($349 million) in cash and shares was seen as Mitie flexing its financial muscle to scale-up in Britain’s contract-services industry, which has been through a turbulent few years, with the pandemic adding to its woes.

The company manages and maintains some of London’s best-known landmarks, and works with the likes of Britain’s NHS, the police and the Bank of England. The deal would increase Mitie’s sales by around 50%.

Interserve, one of the British government’s biggest contractors, went into administration in March last year after it ran into difficulty following a string of ill-advised acquisitions and loss-making contracts.

It offers support services, equipment and construction services to public and private sectors.

($1 = 0.7769 pounds)

Reporting by Pushkala Aripaka in Bengaluru; Editing by Anil D’Silva, Kirsten Donovan