Canadians in £3bn hostile bid for ‘deeply troubled G4S’: Private equity-backed rival claims UK security giant needs new management
G4S has come under fire from a Canadian rival mounting a £3billion hostile takeover bid.
In its latest salvo, Garda World described the British security services group as a ‘deeply troubled company’ which needs fresh management to deal with ‘scandals, crises and lawsuits’.
The private equity-backed firm stuck with its offer of 190p per share, despite the approach being unanimously rejected by the G4S board just over two weeks ago.
Garda World described G4S as a ‘deeply troubled company’ which needs fresh management to deal with ‘scandals, crises and lawsuits’
G4S yesterday urged investors to ‘take absolutely no action in relation to the unattractive and opportunistic offer’ and described its timing during the pandemic as ‘highly opportunistic’.
But investors piled in, sending shares in the FTSE 250 firm surging above £2 for the first time since February, before the Covid-19 crisis triggered a rout on global stockmarkets.
They are now up 37 per cent since news of the £3billion takeover bid emerged just over a fortnight ago.
In the coming days Garda World will start contacting G4S shareholders, which include fund manager Schroders and New York investment firm Sachem Head Capital Management.
A key part of its pitch will include accusations that G4S bosses have ‘destroyed nearly £1billion of shareholder value’ over the last seven years, spending hundreds of millions of pounds on restructuring programmes without managing to improve its margins.
But it will also warn that G4S ‘remains dogged by scandals, crises and lawsuits’ which could lead to ‘further claims, provisions and contingent liabilities’.
And G4S is hampered by a £276million funding shortfall in its pension fund, Garda World said.
The firm’s boss Stephan Cretier said: ‘G4S is a deeply troubled business which needs a committed owner-operator team that understands the sector and has a definitive and comprehensive plan.
‘Stakeholders can take no confidence in the promises of a senior management team that has been in place for seven years and has not delivered.’
He added that the ‘G4S board has behaved in a cavalier way by rejecting our potential offer out of hand’.
The 190p a share offer amounts to a 31 per cent premium on the 145p that shares had been trading at just before the offer was initially made last month.
David Buik, a veteran city commentator and consultant at Aquis Exchange, said: ‘From a management perspective heading all the way back to the London Olympics in 2012, G4S has been a shambles.
Garda World are prepared to pay a reasonable premium for it. I’d be very surprised if shareholders don’t go for it.’
The Montreal-based firm – which is 51 per cent backed by London-based private equity giant BC Partners – said the deal would be funded with equity from BC Partners and loans from three banks. It has made several attempts to engage with the G4S board over the past three months.
The firm also made an approach last year but walked away without making an offer.
G4S employs around 533,000 people in more than 80 countries, including 25,000 in the UK.
It runs security and cash handling services, while also managing Covid test centres around the UK, and four prisons.
But it has been mired in scandal in recent years, such as failing to provide enough staff for the London 2012 Olympics.
G4S also landed itself in hot water after it emerged it had been overcharging taxpayers for tagging criminals, some of whom were dead or back in prison.
Over the summer it announced plans to cut 1,150 jobs, mainly in its cash handling business amid a move to online banking and digital payments.
Garda World employs more than 102,000 globally. It guards British embassies in places such as Iraq, Libya, Afghanistan and Somalia.