Garda Mulls Hostile Bid After G4S Rebuffs $3.7 Billion Offer

GardaWorld is appealing to investors in U.K. security-services rival G4S Plc to help force management to the negotiating table after making an unsuccessful bid worth about 2.9 billion pounds ($3.7 billion).

An all-cash offer of 190 pence a share would be of “clear and immediate benefit” to shareholders, customers, employees and members of the company’s pension schemes, Montreal-based Garda said in a statement on Monday. G4S reiterated its opposition to the move, saying the bid significantly undervalues the company.

“The board believes that the timing of the proposal is highly opportunistic, coming as it does at a time of severe turbulence in global financial markets,” G4S said. “Shareholders are strongly advised to take absolutely no action.”

A combination between Garda and G4S would create a global security firm with more than 600,000 employees -- with about half a million coming from the latter company. The two firms provide guards to everything from airports to prisons and have operations around the world.

Private Equity

Garda’s latest offer was its third unsolicited approach for G4S since June 26, according to the U.K. firm, and follows an aborted move by the Canadian company last year.

The deal would be financed by private-equity investor BC Partners, which owns a 51% stake in Garda. The rest of the group is owned by Chief Executive Officer Stephan Cretier and other management.

G4S shares traded 24% higher to 180.80 pence as of 3:10 p.m. in London. Garda is closely held.

G4S’s business has proven resilient during the Covid-19 pandemic, Bloomberg Intelligence analyst Eshan Toorabally said in a note, as its services are mostly deemed essential and it has low exposure to struggling markets such as events and travel. The global security market is fragmented and has potential for consolidation, he added.

Cretier is hoping to tempt G4S investors who have seen the share price tumble by almost 40% this year. Yet he may face opposition from the U.K. government, which is wary of opportunistic foreign takeovers of British companies amid the Covid-19 pandemic.

Garda’s CEO moved early to ease any concerns about job losses and said the combined group would be committed to the country. “Significant steps would be taken to address the company’s persistent underfunding of U.K. pension obligations,” he said.

©2020 Bloomberg L.P.

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