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G4S has reached agreement with US rival, Allied Universal, as to the terms of a recommended cash offer by for its entire issued share capital. The offer of 245 pence per share values G4S at £3.8 bn, and represents a 17% increase on Allied Universal’s original proposal of 210 pence per share, which G4S had rejected for ‘significantly undervaluing the company’. The offer also represents the second largest takeover offer in 2020, after Intact Financial Corp and Tryg’s joint £7.2 bn offer for RSA Insurance.The announcement comes days after GardaWorld, who have been targeting G4S since 14 September 2020, amped up its offer from 190 pence to 235 pence per share.
The transaction, if it goes ahead, would combine two of the world’s largest security companies, and would create a business with revenues of approximately US$18 bn (£13.5 bn). GardaWorld had previously highlighted that this combination could raise significant competition issues which would delay the transaction. However, Allied Universal confirmed in its announcement that it has already cleared US antitrust review, and is in the process of obtaining all other necessary antitrust and regulatory approvals, which it is confident will be obtained in a ‘timely fashion’.
Allied Universal have also entered into a Memorandum of Understanding with the G4S Pension Trustee relating to the future funding of the G4S UK Pension Scheme. GardaWorld also addressed the pension deficit in its revised offer, agreeing to a £770m support package with the G4S Pension Trustee. The outstanding pension liabilities have been a huge point of contention, with GardaWorld previously using this to highlight failures by the G4S board, and employee representatives of G4S calling for commitments to honour the pension arrangements.
Following the announcement of the offer, G4S released a circular urging shareholders to ‘not accept the revised GardaWorld Offer which undervalues G4S and is at a lower value than the Allied Universal offer’ and confirming that the board unanimously intend to recommend the Allied Universal offer.
GardaWorld, who has been pursuing a hostile takeover of G4S for months, previously stated that the increase to 235 pence would be its final offer (see GardaWorld amps up G4S offer). However, in light of Allied Universal’s recommended offer, GardaWorld has revised its position, stating that it will be setting aside its statement on not increasing the offer price as it considers its options. GardaWorld has urged G4S shareholders to take no action at this time.
G4S has seen its shares rise 76% since GardaWorld began its pursuit in September 2020.
Market Tracker will continue to monitor this transaction as it develops.
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Market Tracker is a unique service for corporate lawyers housed within Lexis®PSL Corporate. It features a powerful transaction data analysis tool for accessing, analysing and comparing the specific features of corporate transactions, with a comprehensive and searchable library of deal documentation across 14 different deal types. The Market Tracker product also includes news and analysis of key corporate deals and activity and in-depth analysis of recent trends in corporate transactions.
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