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Mitie adds to security business with £14mln acquisition of Compass Group subsidiary

The combination will offer opportunities to accelerate the growth of Mitie's premium technology-enabled and intelligence-led security solutions, the company said

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Mitie’s security division accounts for around a quarter of group revenues

MITIE Group PLC (LON:MTO) has added to its security business with the £14mln acquisition of Compass Group PLC’s (LON:CPG) loss-making Vision Security (VSG) division.

VSG employs around 6,000 employees, who service more than 1,400 guarding locations, while the company’s security systems are used at over 5,000 locations across the UK and Ireland.

READ: Mitie sells pest control division to Rentokil for £40mln

The acquisition will add to Mitie’s existing security arm, which accounts for around a quarter of the group’s annual revenues.

“As a core part of Mitie, our security business has delivered a strong performance over the last three years, with sales growing by over 30%,” said chief executive Phil Bentley.

“This acquisition gives us the leadership position we seek to maximise value from our technology-led solutions.”

In the year ended September 30, VSG reported revenue of £192.1mln and losses before tax of £2.7mln. Those same accounts showed it had £42.4mln worth of assets.

Despite last year’s loss, Mitie expects the division will report “modest profitability” in its next set of results.

Peel Hunt analyst Christopher Bamberry noted that the acquisition "will offer opportunities to accelerate the growth of Mitie's premium technology-enabled security services".

Bamberry maintained his 'hold' recommendation and 165 price target.

Mitie shares opened higher on Monday before falling back and are currently flat at 14.1p in early afternoon morning, while Compass’ stock has nudged 0.5% higher to 1,603p.

-- Updates for share price and analyst comment --

Quick facts: MITIE Group PLC

Price: 134.4 GBX

LSE:MTO
Market: LSE
Market Cap: £491.82 m
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