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LONDON (Alliance News) - Mears Group PLC on Monday said it raised GBP22.5 million through a share placing to cover the initial sum payable under its agreement with Mitie Group PLC, announced earlier in the day.
The housing and social care provider issued 6.8 million shares at a price of 331.5 pence each. The placing was conducted by way of an accelerated bookbuild.
The placing price represented a discount of 9.9% to the middle market price at the time that the company and Peel Hunt agreed the placing.
Mears shares were trading 7/9% lower on Monday at 339.00p each, while Mitie shares were up 1.1% at 148.60p each.
Following the admission, Mears will have 110.4 million shares issued overall.
Mears said its major shareholder PrimeStone Capital LLP subscribed for 1.2 million placing shares, raising GBP4.0 million.
Mears expects the acquisition to increase its annual revenue by at least GBP100 million and its order book by GBP200 million.
"The acquisition is expected to be earnings accretive in 2019 and the mid term with scope to outperform," Mears added.
Early on Monday, Mitie said it agreed to sell its social housing business to Mears for up to GBP35 million in cash.
The deal will be structured as a sale of the entire issued share capital of Mitie Property Management Ltd and of MPS Housing Ltd, a newly-incorporated company holding the assets of Mitie Property Services UK Ltd.
The initial payment for the sale is GBP22.5 million in cash. The deal also involves an additional GBP12.5 million payment over a period of two years, subject to the achievement of performance milestones.
Mitie said it will use the majority of the proceeds from the sale to strengthen its balance sheet and accelerate a partial repayment of the deficit of the firm's defined-benefit pension scheme.
