News on 15 May
ISS bids £26m for RCO

Consolidation in the European support services market continues with the announcement that Copenhagen-based ISS has made a recommended cash offer for RCO Holdings plc.

RCO, formed in 1968 and employing over 7,000 people, provides facility management and business support services to the public sector, commerce and industry through its principal trading subsidiary RCO Support Services. Clients include BBC TV, Glaxo Wellcome and Lloyd's of London.

Operating exclusively in the UK, RCO reported an operating profit before interest, tax and exceptional items of £2.2m on a turnover of £62.7 million for the year to 1st October 1999.

ISS, which has embarked on a re-engineering programme to transform itself from the world's biggest cleaning company into an international service business, will also be acquiring RCO's interest in two healthcare PFI projects to add to its own activities in this market. ISS has signed five of the UK's PFI hospital contracts as service providers.

RCO was an original sponsor and founder shareholder, along with Bovis and Bank of Scotland, in the Catalyst Healthcare Consortium formed in 1995 to design, build, finance, own and service new hospitals for the NHS. RCO owns 16.6% of the equity in two Private Finance Initiative projects - the 600 bed Calderdale Hospital in Halifax and the new 450 bed Worcester Royal Infirmary. It is the nominated provider of non-clinical support services at the hospitals under long-term operating agreements, which commence in 2001, and the following year.

ISS's bid is 247p in cash for each RCO share, valuing RCO at around £26.5 million. The offer represents a premium of about 54% to the closing price of 160.5p on Wednesday. The announcement of a possible offer was made on Thursday and the shares were trading at 261p on Friday. They reached a 52 week high of 292p last July.

The offer will be unanimously recommended by the Board of Directors of RCO but is conditional on valid acceptances for at least 90% of the entire issued share capital of the company. Undertakings by the institutional holders will cease to be binding if a competing offer is announced equal to or above 272p.

Waldemar Schmidt, Chief Executive Officer of ISS (pictured) said: "We strongly believe that this offer is in the interests of the shareholders of both companies. The combination of ISS Europe and RCO creates a strong partnership and thereby further strengthens our position in the UK multiservice market".

ISS employs more than 220,000 people in 34 countries throughout Europe, Asia, South America and the Middle East. Total turnover reached DKK 19.8 billion in 1999. If the acquisition goes ahead, the total number of ISS employees in the UK and Eire would be more than 37,000.

Alan G. Raven, Chairman of RCO, said: "We have thought long and hard about our future and have concluded that it would be best for the business to become part of a larger organisation. ISS is a world class company with excellent credentials which we have known and admired for a long time as a competitor. We look forward to working with them for the benefit of our clients and employees."


Richard Byatt


For more information on ISS and RCO visit:

www.iss-group.com

www.rcogroup.com

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