Outsourcer Mitie has proposed to merge with facilities management firm Interserve Support Services by the end of the year in a £271m deal.

The combined organisation will become the largest facilities management company in the UK, employing more than 77,500 people.

Interserve’s board said the proposed transaction would create a ‘larger and stronger’ facilities management business and would be ‘highly attractive’ to its stakeholders.

Chairman of Interserve Group, Alan Lovell, said: ‘The transaction, which is consistent with our stated strategy of realising value for our shareholders, will reduce the group’s debts, enable a pay down to our shareholders and stabilise the group’s financial position through a retention of a proportion of the proceeds.

‘It will leave Interserve as a focused group, executing clear business plans in Interserve Construction and RMD Kwikform, as well as our citizen services portfolio of businesses.

‘Interserve Group sees significant opportunities for these businesses in their respective markets, which we will continue to pursue with a high level of discipline.’