Shares in Mitie Group rise after catering arm sale

Shares in the outsourcing giant Mitie Group have risen sharply after it confirmed the sale of its catering division.

The transaction first reported by Sky News will see Mitie offload “Gather & Gather”, its catering arm, in a deal valued at £85m to CH&CO, a contract caterer which holds a royal warrant from The Queen.

Mitie Catering employs more than 3,600 people at over 330 sites across the UK and Ireland.

The deal will allow CH&CO to offer “Gather & Gather” catering services exclusively to Mitie’s clients.

According to a stock exchange filing, Gather & Gather’s management team will remain in place under CH&CO’s ownership.

Mitie’s chief executive Phil Bentley said: “By teaming up with CH&CO at this time, we believe this ensures the best choice and competitive pricing for our clients, whilst releasing funds for reinvestment and strengthening our balance sheet.

“The Gather & Gather management team will continue to lead the business and we look forward to working with them on delivering their unique offering to our existing clients and on future IFM opportunities.”

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The deal represents the latest attempt‎ by Mitie’s chief executive to reshape the company during a period of continuing pressure on the outsourcing sector.

Earlier this year, rival Interserve briefly fell into administration before being taken over by a consortium of banks and hedge funds‎.

Mitie, which employs about 56,000 people in Britain, has rebuilt its financial and operational credibility under Mr Bentley, who ran British Gas and then Cable & Wireless Communications before joining the outsourcer in 2016.

Its shares have risen about 10% during the last 12 months, outperforming most of Mitie’s rivals in a market dogged by protracted concerns about outsourcers’ finances.

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