Tenon Group's AIM-listed integrated security & facility management firm Mortice Ltd has struck a deal to buy UK’s independent facility management service company Office & General Group Ltd (O&G) for £6.5 million ($10.1 million or Rs 64.8 crore) in a cash and stock deal, according to a press release.
It would pay up to £3 million in cash, subject to certain potential adjustments besides issuing 3 million new shares on completion and 0.5 million shares two years after that. This would give O&G owners around 5.92 per cent stake in Mortice which would move up to 6.84 per cent later. These shares would come with a lock-in clause.
Mortice will enter into new arrangements with Barclays Bank PLC to finance the acquisition and to replace O&G Group's existing banking facilities.
Completion of the acquisition is conditional upon shareholders' approval at Mortice's extraordinary general meeting on August 31, 2015.
Through the acquisition, Tenon will expand not only in the Indian sub-continent but also in the global arena. It will also help the firm cross the Rs 1,000 crore revenue mark.
O&G is 27-year-old facility management company having a niche presence in the UK market dealing with commercial and office facility management encompassing soft and hard services. It has a strong position in servicing universities and Ministry of Defense besides other sectors and counts clients like Fedex, Steria and CBRE.
The company is headquartered in London with offices in Manchester and Wolverhampton.
O&G Group’s unaudited results for the year ended March 31, 2015 recorded total revenues from continuing operations of approximately £33.44 million (Rs 334 crore) with EBITDA of approximately £1.20 million (Rs 12 crore) and continuing operations pre-tax profit of approximately £403,000 (Rs 4 crore).
It is owned by Grae Scott and Jonathan Smith, founder and managing director, respectively. The duo will be retained after the deal as consultants.
"The acquisition is an excellent strategic fit, presenting a unique opportunity to leverage the complementary strengths of our robust portfolios and combine the specialised talent and capabilities of both companies to create a leading global business," said Manjit Rajain, group chairman, Tenon Group of Companies.
Started by Rajain in 1995, Tenon Group has a presence in Saudi Arabia, Sri Lanka and Singapore besides India in industries like IT/ ITeS, telecom, commercial complexes, retail, manufacturing and others. It employs 45,000 people in 67 branches. The group took its flagship firm Mortice public in London Stock Exchange's junior market AIM in 2008.
There have been a string of deals in the facility management and related space over the last one year.
Fairfax-controlled Quess Corp (earlier Ikya Group), which is a subsidiary of tour operator Thomas Cook (India) Ltd, acquired Chennai-based industrial facility management services firm Hofincons from Australia's Transfield and acquired NYSE-listed Aramark's Mumbai-based facility management arm; Mumbai-based SILA acquired 51 per cent stake in Envocare Pest Control; India Value Fund Advisors (IVFA) and former Godrej Consumer Goods’ executive Arumugham Mahendran jointly acquired ISS Hicare, the second-largest pesticide services company in the country; ValuePro International Pvt Ltd acquired indoor plants firm Gardenia Ornamental.
Private equity firm ICICI Venture also divested its entire stake in Chennai-based integrated facility management services firm Updater Services Pvt Ltd to a special purpose vehicle (SPV) owned by the promoters of the company.