Analyst describes £116m as a ‘pretty full price' for £233m-turnover facilities management company
Interserve has received a mixed reaction from the City over its £116m recommended takeover of facilities management company MacLellan.
Some analysts said that the price, which was revealed on Tuesday and represents a cash and shares offer of 116p a share, was higher than they would have expected for the £233m turnover company.
One analyst said: "Interserve is paying a pretty full price but it will hope to get a better rating for its shares as a facilities manager than as a builder. MacLellan's shareholders will be delighted."
Analysts at Altium Securities said they thought integrating the businesses would be difficult.
A spokesperson for Interserve said there was little overlap between the two businesses, because MacLellan was largely a soft services provider working for the private sector, whereas Interserve was focused on providing hard FM services for the public sector.
He said this means that where they did share clients, such as BP, BAA and the Department for Work and Pensions, they were employed to carry out different services.
Andrew Ringrose, Interserve chief executive, has been keen to expand and the MacLellan deal is significant for the company. MacLellan, which is listed on the alternative investment market, made an £8.8m pre-tax profit in 2005, an increase of more than 100% on the year before. Turnover rose 22% to £233m.
This compares with a £47.9m pre-tax profit at Interserve, on a turnover of £1.16bn.
John Foley, MacLellan's chief executive, and Stephen Shipley, its finance director, will leave the firm if the takeover goes ahead.
MacLellan's head office in Worcester is expected to stay open initially and Interserve would retain the brand for the time being.
The Interserve spokesperson said: "We are proposing to run MacLellan in parallel with our own. We are not anticipating job losses."
Shares in Interserve were little affected on Tuesday, up less than 1% to 385p. Shares in MacLellan fell by 3.5% to 112p. The takeover is now subject to shareholder approval.
What Ringrose is buying
MacLellan at a glance
- 2005 turnover: £233m (+22%) 2005 pre-tax profit: £8.8m (+100%)
- Work is predominantly in soft services
- Clients include Sainsbury’s, Boots, BAA, BP, BAE
- Based in Worcester
- 13,500 staff