Bidding war erupts for control of G4S: US rival mulls rival offer

Shares in G4S surged after the beleaguered security firm found itself in the middle of a takeover battle.

The British company is already fighting off a hostile £2.9billion bid from Canada’s Garda World, which it has branded ‘unattractive and opportunistic’.

But yesterday it revealed that US rival Allied Universal Security Services has also approached it with a potential offer. 

G4S did not give details of the ‘expression of interest’ and stressed there was ‘no certainty that an offer will be made’.

But the announcement sent its shares 6.2 per cent or 12.5p, higher to 214p, which is well above the 190p a share offer price made by Garda, as investors anticipated a bidding war. 

Allied Universal declined to comment.

The firm is owned by US private equity firm Warburg Pincus and has operations in the UK, US, Canada and Mexico.

In a note to clients, Panmure Gordon analyst Robert Plant said that a move by Allied Universal would put pressure on Garda to improve its bid. ‘We think Garda could make a higher offer to acquire G4S,’ he wrote.

G4S, one of the world’s largest private security companies, employs more than 500,000 staff across 90 countries.

But it has struggled in recent years after a string of setbacks, including failing to provide enough security staff for the 2012 Olympic Games in London, the loss of a contract to run a Birmingham prison, and a decision by Norway’s wealth fund not to invest in it.

Since Garda’s swoop on the company was made public on September 14, the stock has surged more than 45 per cent higher.

It is now valued at £3.3billion.

But G4S has repeatedly rejected the offer from Garda, claim- ing that it undervalues the company. 

It argues that Garda, which is owned by private equity firm BC Partners, has made £524million of losses in the last three years and is not big enough to be a truly global player. 

That has prompted the Canadian firm to go hostile, taking its appeal directly to investors and over the heads of the G4S board.

It began meeting key shareholders this week, hoping to persuade them to back its proposal.

But it is yet to garner enough support, with top investors Schroders, Sachem Head and Harris Associates saying the 190p bid undervalues the business.

Garda has also clashed with G4S over the pension deficit, which the suitor claims investors should be ‘seriously concerned’ about.

In a response this week, G4S insisted the 2,400-member scheme was well-funded and trustees were happy with plans to balance a £276million shortfall.

Boss Ashley Almanza, who has run the company since 2013, also accused Garda of failing to put forward any plans of its own.Garda has separately attacked G4S management over a litany of ‘mis-steps’, however, which it says have damaged the company’s value.

It claims these include selling assets at knockdown prices and billion-pound legal claims made against it.

G4S has reportedly been inviting takeover offers from other security industry competitors, prompting some to suggest that Allied Universal could emerge as a ‘white knight’ bidder.

It comes as the security services market has received a boost during the pandemic, with demand booming for thermal cameras and personnel screening services as companies reopen after coronavirus lockdowns.

G4S has increasingly focused on its security arm, selling most of its cash-handling business for £727million to US rival Brinks earlier this year. It held on to its operations in the UK, however.

Earlier this week, Schroders’ head of UK equities Sue Noffke said Garda’s 190p bid was ignoring ‘significant unlocked value’ in the remnants of its cash handling business, which serves retailers.

She added that most of G4S’s issues also pre-dated current management. In a rare public dressing-down for Garda, Noffke said: ‘We are prepared to engage and are open to a deal but it has to beat a fair price.’

Panmure’s Plant said: ‘We think G4S should prove an attractive asset as it is the global leader in security and, post the sale of most of its cash division to Brinks this year, it is possibly an easier company to digest.’