Scandal-prone G4S has accused a private equity backed Canadian rival of exploiting the coronavirus crisis to mount a £3billion hostile takeover bid.
The security group saw its shares plunge 68 per cent after the pandemic struck and was still down 33 per cent on the year at the start of trading yesterday.
But G4S stock soared more than 25 per cent after Garda World, the largest privately-owned security firm on earth, offered 190p a share for the London-listed firm and promised to turn it around.
G4S soared more than 25 per cent after Garda World, the largest privately-owned security firm on earth, offered 190p a share for the London-listed firm and promised to turn it around
In a strongly worded statement, it said G4S has ‘failed its shareholders, employees, customers and the public for at least a decade’.
The Canadian business also urged G4S shareholders to force its board to come to the negotiating table, claiming it had been repeatedly ‘summarily dismissed or ignored’ as previous approaches have been spurned.
Stephan Cretier, founder and chief executive of Garda World, said: ‘G4S needs an owner, not a manager.’
The 57-year-old added: ‘We will turn G4S around, ensuring it delivers for its customers, its people and the public.’
The Montreal-based firm – which is 51 per cent backed by London-based private equity giant BC Partners – said it had offered to pay 190p a share.
This amounts to a 31 per cent premium on the 145p G4S shares had been trading at just before the offer was made.
The deal, it said, would be funded with equity from BC Partners and loans from three banks.
Ratcheting up the pressure, BC Partners’ chairman Raymond Svider and Cretier said in a joint letter to G4S chairman John Connolly on August 31: ‘This is an offer your board should not ignore.’
The security group saw its shares plunge 68 per cent after the pandemic struck and was still down 33 per cent on the year at the start of trading yesterday
The latest offer was welcomed by investors with shares soaring by a quarter, or 36.55p, to 182.45p.
But G4S hit back, describing the timing of the unsolicited proposal from BC Partners and Garda World as ‘highly opportunistic, coming at is does at a time of severe turbulence in global financial markets’.
It said the company had proven itself to be ‘particularly resilient’ since the outbreak of the pandemic, and said the offer ‘significantly undervalues the company and its prospects’. It said ‘shareholders are strongly advised to take absolutely no action in relation to the new proposal’.
The firm added that two offers were made in June, one at 145p per share and the other at 153p per share, which were both unanimously rejected by the board.
Garda World now has to make a formal takeover bid by 5pm on October 12. G4S employs around 533,000 people in more than 80 countries, including around 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 the FTSE 250 firm has been mired in a string of scandals in recent years such as failing to provide enough staff for the London Olympics in 2012.
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.
Garda World employs more than 102,000 globally and one commentator said it would be a case of the ‘tiddler swallowing the whale’ if the deal does go ahead.
Neil Wilson, chief market analyst at Markets.com, said: ‘I think this is just the start of an autumn of deals. I think we will see many more bids of this nature – foreign private money snapping up cheap, undervalued UK equities.’