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On 14 September, Canada based security company, Garda World Security (Garda) announced its intention to acquire the entire issued and to be issued share capital of FTSE 250, security company, G4S plc, at 190 pence per share, in order to create ‘the world's leading security service provider’. The offer values G4S at £2.95 bn, making it the largest deal of 2020 so far, should it go through.
The latest approach is one of three attempts Garda has made to engage with the board of G4S in the last 3 months, all of which they state have been ‘dismissed or ignored’. Garda is now therefore speaking directly to shareholders, encouraging them to push the board to engage in discussion, stating that ‘GardaWorld believes G4S is a business which has not delivered for shareholders, customers, employees or the public. G4S needs new, professional and experienced leadership to build a credible strategic plan which will transform G4S's prospects and distance the business from its unhappy past’.
G4S has been caught in scandal after scandal in the last decade, from failing to provide enough security in the 2012 Olympics, which resulted in the army having to be drafted, to investigations by the SFO and losing its contract to run a Birmingham prison last year, after the prison was found to be extremely violent.
Stephan Crétier, who is the founder, chair, CEO and president of Garda said the following of the offer:
‘valuation offers a certain path for G4S's shareholders to immediately recover lost value. We encourage shareholders to ask G4S's board to begin engaging with us.’
The latest offer represents a premium of 30% to the share price at the close of 13 September, being the last business day prior the announcement. The offer would also represent an 86% premium to G4S’s share price, prior to Garda’s first approach in June.
G4S, whose share price has been steadily growing since it initially plummeted in March, during the height of the pandemic, have since responded, confirming that the board has unanimously rejected all 3 proposals. The board described the deal as ‘highly opportunistic, coming as it does at a time of severe turbulence in global financial markets’, and stated the offer ‘significantly undervalued the company and its prospects’. The board also went on to highlight the company’s ‘resilient performance’ in H1 2020, and the steps it has taken to improve the company, including reshaping its portfolio and enhancing governance and controls. In its announcement, G4S stated the following, urging shareholders not to take action:
‘The Board believes the Company is increasingly well placed to deliver growth, profitability and substantial free cash flow as it delivers its vision of being the world’s leading global, integrated security company and the trusted partner of choice in the industry.’
This is not the first time Garda has made a bid for G4S, as it also announced it was considering making an offer for the FTSE 250 company in April of last year. However, this did not come to fruition and it confirmed it would not be making an offer in May. Since then, Garda has been taken over by private equity house BC partners limited, in October 2019.
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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