Interserve rises to number three after £250m deal for Rentokil arm

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SUPPORT services and building group Interserve is to buy Rentokil’s Initial Facilities maintenance business for £250m in a deal that will give it access to more than 400 private sector customers including Debenhams and Transport for London.

Interserve, which recently won a £150m facilities management contract at the BBC’s MediaCityUK in Salford and New Broadcasting House in London, said the deal will propel it from the sixth to the third biggest UK support services provider.

Interserve’s chief executive Adrian Ringrose said: “The rationale behind the deal is to make us a bigger player in a big market that’s growing.

“We’re now number six, they’re number nine and the deal will make us number three. We only have a four per cent market share as the sector is so fragmented so it’s not an issue for the OFT. We’re strong where they’re not and they’re strong where we’re not. We are 70 per cent public sector so we’re a small fish in the private sector. Initial Facilities is 85 per cent private sector. Put the two together and we’re 50/50 so we’re much more balanced.”

Initial Facilities provides a wide range of services such as catering, cleaning, security and building maintenance to the likes of Xerox, Talk Talk, JP Morgan and Nissan.

Interserve aims to make savings of £5m by the end of next year, and will strip out duplicated functions in corporate support and operational management. It said the number of job cuts is likely to be minimal.

Interserve also announced annual profits yesterday, which showed an eight per cent rise in underlying profits to £81.1m in 2013.

In Yorkshire, Interserve has been working on three new police buildings in Leeds, Normanton and Wakefield. Interserve won a £150m deal to build new divisional headquarters and custody suites.

It is also working on the £7m upgrade of York’s electricity supply.

The group employs around 5,000 in Yorkshire, including cleaning contracts in Sainsbury’s, Boots and other retailers.