Shares round-up: Mitie slumps, Wise US-bound, Fevertree Drinks

Dealmaking MITIE Group (LSE:MTO) today gave up a chunk of its 40% post-tariffs rally while New York-bound Wise Class A (LSE:WISE) ended hopes of FTSE 100 inclusion and Fevertree Drinks (LSE:FEVR) reassured investors.

The FTSE 250 index recovered from a weak start to reach lunchtime near its opening mark, despite heavy selling of Wizz Air Holdings (LSE:WIZZ) and the retreat of yesterday’s top-performing stock discoverIE Group (LSE:DSCV).

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Facilities manager Mitie fell 19.4p to 140.2p after offering new shares as part of a £366 million deal to buy AIM-listed fire safety and inspection business Marlowe (LSE:MRL).

It also suspended its £125 million buyback programme, in line with a capital deployment policy that prioritises strategic M&A. Mitie had bought two million shares at an average 140p since mid-April, having seen the stock jump from its post-tariffs low of 112p to last night’s 160p.

The shares were near 30p in late 2020, the year that Mitie braved Covid uncertainty to launch a takeover of Interserve. That tie-up delivered £56 million of cost synergies, compared to an initial expectation of £30 million, and has underpinned a turnaround in fortunes.

Source: TradingView. Past performance is not a guide to future performance.

Overall, the company estimates that its M&A activity has added a net £100 million of operating profit from a net spend of £200 million on about 20 businesses over the past eight years.

The latest acquisition involving Marlowe comes as Mitie looks to pivot from being a UK leader in facilities management to one in technology-led and data-driven “facilities transformation”.

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Marlowe is a provider of testing, inspection and certification services to companies, a market valued at £7.6 billion and growing at 4-6% a year.

The acquisition, which has been backed by the Marlowe board, is expected to be margin and earnings accretive in Mitie’s first full year of ownership.

Panmure Liberum said last night: “We believe that the acquisition would fit Mitie’s strategy well. We view fire safety and inspection as a large and growing market and see Marlowe as an attractive business.”

The deal involves the offer of 1.1 new Mitie shares and 290p in cash for every Marlowe share held, which at last night’s closing price implied a premium of 26.5% to 466p for a market value of £366 million.

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The shares of global money transfer business Wise rallied to a new high after it announced plans for a primary listing in the US as it looks to tap a broader pool of growth-focused investors.

The outcome of a listing review was disclosed along with results for the year to March, which showed £282 million of underlying profit equivalent to a gross margin of 21%. These figures were ahead of City expectations.

Peel Hunt, which upgraded its price target by 200p to 1,300p, said a significant part of the gross margin progress was structural due to increased direct connections to global payment systems.

The broker added: “Wise continues to invest on its platform, both on tech and marketing, and is committed to spending £2 billion in the next two years. We believe that continuing structural improvements pose upside risks to pre-tax profit margin estimates.”

The figures were put in the shade by the pursuit of a New York primary listing, which ended hopes that Wise might seek to make itself eligible for FTSE 100 inclusion.

Wise shares will continue to be traded in London through a secondary listing. They made their debut in 2021, when the company was valued at £9 million compared with today’s £11 billion.

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Fevertree Drinks consolidated the recent improvement for shares when its AGM trading statement disclosed that its US strategic partnership with Molson Coors is on track, and that the two parties intend to share the impact of 10% tariffs.

The world’s fourth-largest brewer, whose brands include Carling, Staropramen and Miller Lite, has stepped up its expansion beyond the beer market by taking a 8.5% stake as Fevertree’s second-largest shareholder.

The premium mixers firm said today it remains comfortable with consensus expectations of low single-digit revenue growth at constant currency and 12% adjusted margin for 2025.

It said it continues to deliver strong momentum in the US, with underlying brand performance well ahead of the competition.

Shares added 5p to 889p following the update, which compares with 810p a month ago.

Panmure Liberum, which has a target price of 1,100p, said: “The key takeaway is that 2025 margin guidance has been maintained despite the 10% tariffs on UK exports to the US, which is a reassuringly positive message.”