MSS sells core business to Rentokil
MANAGED Support Services is to become a cash shell after selling its building services division to Rentokil Initial in a £6.5m deal.
The business, which employs around 200 people at sites in Manchester and London, has an annual turnover of £22m and carries out maintenance programmes for the likes of Bruntwood and The Co-operative Group.
The proposed sale is subject to approval by Rentokil’s shareholders, and would bring to an end a turbulent period of trading by Managed Support Services since its float on the stockmarket five years ago.
The company, which was then known as Worthington Nicholls, floated on the Alternative Investment Market in June 2006 at 50p per share, which gave it a market cap of £32.5m. It then made a series of acquisitions and its shares climbed in value to 194p in 20078, which gave it a value of more than £140m.
However, following a series of writedowns blamed on “accounting irregularities” discovered after the departure of former chief executive Mark Worthington, the company’s shares plummeted.
Rentokil this morning said the acquisition of MSS’s building services division “”provides excellent synergies with Rentokil Initial’s existing mechanical and electrical engineering building services business”.
Managed Support Services said that after suffering “material” trading losses in 2007 and 2008, it had undergone a major restructuring and a reduction in its operations. It added that it had sought to rebuild a core business in the building services market through acquisitions, but added that despite some notable account wins it had made “insufficient progress” in growing its operations.
“The board therefore decided that the prospects for the division would be realised more rapidly if it became part of a larger trading group.
“Accordingly, following the receipt of unsolicited approaches, the board circulated financial information on the division to a number of potential offerors and subsequently agreed terms with the purchaser”.
It added that it plans to use the proceeds to reinvest in the building services sector. Chief executive Simon Beart will remain with MSS, but chief operating officer Jamie Reynolds will join Rentokil Initial.
