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Mitie Group confirms withdrawal from planned Property Management business sale

The support services firm said its board “considered all indicative offers received for this profitable business, and concluded that none were at a sufficient level with which to proceed.”

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In a note to clients on Mitie, analysts at Liberum Capital said: “The failure to sell Property is a slight disappointment but not a huge surprise”

Mitie Group PLC (LON:MTO) today confirmed that it has withdrawn from a planned sale its Property Management business.

In a statement, the struggling support services firm said its board “considered all indicative offers received for this profitable business, and concluded that none were at a sufficient level with which to proceed.”

READ: MITIE axes 480 jobs as costs of recovery plan rise

It added: “The decision to retain Mitie Property Management provides clarity of ownership and reflects the Board's view that there is greater shareholder and strategic value in keeping the business.

“The Property Management team can now fully focus on continuing to deliver for its customers and on its own operational and financial performance.”

"Slight disappointment but not a huge surprise"

In a note to clients, analysts at Liberum Capital said: “The failure to sell Property is a slight disappointment but not a huge surprise.”

They added: “The Property Services market is challenging and does not fit with the rest of group. De-leveraging harder but the leverage ratios actually improve and we still believe that <2x average net debt possible in FY 2019.”

The analysts said  the move brings the part reversal of a previous downgrade and they have increased the 2018 and 2019 EPS by 11% and 9% respectively.

Liberum repeated a ‘buy’ rating and 270p price target on Mitie shares.

In late morning trading, Mitie shares were 0.3%, or 0.6p easier at 196.7p.

Mitie has been under the cosh for over a year following trading woes that saw the departure of chief executive Ruby McGregor-Smith and the introduction of a restructuring plan under former British Gas boss Phil Bentley, who took over in October 2016.

Bentley stood down temporarily in September due to ill health, with Peter Dickinson appointed acting chief executive, but he returned to his post in early October.

In August, Mitie revealed it was being investigated by UK financial regulator, FCA, over the timing of its profit warnings in 2016.

Quick facts: MITIE Group PLC

Price: 128.3 GBX

LSE:MTO
Market: LSE
Market Cap: £469.5 m
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