Dan Coatsworth, head of markets at AJ Bell, said: “Where there’s muck, there’s brass. Investors who bought shares in Mitie during its darkest days post-Covid stand to walk away with a handsome return. The cleaning company has received a 218.5p per share bid, which is nearly eight times what anyone who bought at the low would have paid in October 2020.
“Mitie’s turnaround has been truly impressive. The company has worked hard to broaden its interests into higher-value services, improve the group’s financial strength, and embrace technology to provide more data-driven insights. It has made the company more relevant for the modern age.
“Despite a solid share price run, the market still hasn’t lavished the stock with a substantially higher rating. The shares have been driven by earnings growth, not a valuation re-rating.
“On the eve of the takeover bid Mitie traded just under 10 times forward earnings. It’s a classic case of the market not recognising the strategic progress and fundamentally undervaluing the group, leaving it vulnerable to a bid.
“Facilities management rival OCS spotted an opportunity and pounced with an offer that might seal the deal. Pitched at a 45 per cent premium to the undisturbed price, the bid is a touch over the 43 per cent blended average premium for all UK-listed takeovers this year, according to AJ Bell research.
“Losing another mid-cap represents another blow to the London Stock Exchange as it grapples with a major shortage of stock market flotations. It’s one-way traffic with stocks delisting and barely any of them being replaced by new names on the market.
“The UK market has historically been rich with industrial support service companies, but one by one they are being picked off. Mitie has been responsible for buying some of them, including Interserve and Marlowe, and it has now gone from being predator to prey.”
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