Interserve has entered into a conditional agreement with a subsidiary of Rentokil Initial Plc, to acquire its facilities service business (Initial Facilities) for a cash consideration of £250m (the Transaction).

The Transaction will be funded through a new bank facility, together with the net proceeds of a placing of up to 12,897,771 new ordinary shares, representing up to 9.99 per cent of Interserve's existing issued ordinary share capital, announced separately today.

Initial Facilities comprises the facilities services businesses of the Rentokil Initial Plc group, with operations in the UK, Ireland and Spain. Employing approximately 25,000 people, it provides a comprehensive range of facilities services from specialist single services, including cleaning, catering, security, mechanical and electrical building maintenance, energy management and statutory compliance, to fully integrated Total Facilities Management (TFM). Initial Facilities has a strong record in serving a broad customer base within the private sector, including professional service businesses, national retailers, transport operators and a variety of industrial businesses.

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Through this Transaction, the board of Interserve (the Board) believes that Interserve will become one of the largest providers (top three by revenue) of support services activities in the UK. The Transaction will create an organisation of increased scale, underpinning future business performance and growth and offering an attractive proposition for customers, partners and employees of both companies.

Adrian Ringrose, Chief Executive of Interserve, said: "We believe that this acquisition will deliver significant strategic progress in growing one of our core businesses and will make us a top three player by revenue in the UK facilities services market.

"The breadth and fit of the services we will now be able to offer, added to the advantages of increased scale and potential synergies, will create a compelling proposition, leaving us well placed for future growth.

"We look forward to bringing the enhanced capabilities of the enlarged Group to a wider addressable market of both new and existing customers, whilst providing more opportunity for our expanded employee base.

"I am pleased to be able to announce this acquisition today in parallel with Interserve's full year 2013 results, in which we report 12% year on year revenue growth."

(CD/JP)