The deal will be sealed at the end of this month and is dependent on a Mears share placing to raise cash and the completion of a TUPE consultation process with over 1,000 affected staff at Mitie.
Mitie Property Management delivers property repairs and maintenance services to over 30 social housing providers generating £128m revenue.
It carries out over 265,000 responsive repairs each year, along with 25,000 repairs for critical services delivered 365/24 hours a day to clients.
The take-over will increase Mears’ annual revenue by at least £100m and the group order book by around £200m. It offers a bid pipeline of around £800m with potential cross-selling opportunities into the Mitie Housing customer base.
MPM was previously part of Mitie’s Property Management division, which also included Mitie’s commercial painting and roofing refurbishment businesses. These trade operations now sit within the Group’s Engineering Services division and are not part of the transaction.
The deal will see an initial payment of £22.5m and a further £12.5m, paid over a period of two years dependent on performance milestones.
David Miles, chief executive of Mears, said: “I am delighted with the acquisition of Mitie Housing which will further strengthen Mears’ market leadership and contract profile in social housing.
“Given our strong operational platform and differentiated service delivery, together with our proven ability to turn around underperforming businesses, I am confident that we will deliver significant improvements to Mitie Housing’s contracts, customers, tenants and employees. “
Mitie chief executive Phil Bentley said: “Mitie’s strategy is to focus on its core businesses and core clients, where service delivery and margin can be enhanced by the use of technology to deliver the critical environment reliability and cost efficiency that our clients increasingly demand from their “Connected Workspace”.
“MPM is a specialist provider of repairs and maintenance services to the social housing sector.
“The sale of MPM to Mears will allow Mitie to continue to focus and build scale in its core businesses. Mears is highly regarded in the social housing sector and has the specialist skills required to deliver to its client base.“