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Mitie shares slide post rights issue

Just over 805mln new shares were admitted from the £201mln rights issue

MITIE Group PLC -

Mitie Group PLC (LON:MTO) shares began trading on Tuesday after the company’s rights issue and acquisition of Interserve’s facilities management business.

Just over 805mln new shares were admitted from the £201mln rights issue to fund the £271mln cash-and-shares acquisition.

The rights issue will dilute earnings per share by an estimated 51% in the 2021 financial year and 62% in 2022, said broker Liberum in a note on Tuesday, but will significantly reduce the debt burden, while the Interserve acquisition will be 27% accretive.

Combining the two businesses creates “a market leader in technical, security and cleaning services”, analyst Joe Brent said in a note to clients. 

“Mitie’s exposure to the public sector will also increase, leading to a more balanced business.”

However, he said the valuation was “still not attractive” so resumed coverage with a ‘hold’ recommendation.

The shares tumbled 45% after the rights issue shares were admitted to 46.95p by mid-morning.

Quick facts: Mitie Group

Price: 38.5 GBX

LSE:MTO
Market: LSE
Market Cap: £450.84 m
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