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U.K. Security Giant G4S Faces Possible Bid From Canada's Garda

Garda World Security Confirms Potential Offer for U.K.'s G4S

(Bloomberg) -- Canadian security company Garda World said it’s considering an offer for G4S Plc, the world’s biggest guarding firm with more than half a million staff, sending shares of the U.K. business up the most ever.

The preliminary deliberations could lead to a cash bid for all or part of G4S, closely held Garda World said in a statement Wednesday, adding that a further announcement will be made if appropriate. G4S said it noted the unsolicited interest while advising shareholders that there can be no certainty of an offer.

The British group endured a tough year in 2018 as sales fell 4 percent amid slumping demand at its armored-truck arm, sending the stock to the steepest annual drop since the firm’s formation in 2004. That prompted G4S to consider a sale or spinoff of the unit, which moves money to and from banks, shops and cash machines, in order to focus on security guards and prison management.

U.K. Security Giant G4S Faces Possible Bid From Canada's Garda

G4S shares, which had lost a quarter of their value in 12 months, surged 31 percent in the biggest advance since the company was formed via a merger of Securicor Plc and Denmark’s Group 4 Falck A/S. They closed almost 20 percent higher at 221 pence in London, valuing the business at 3.43 billion pounds ($4.5 billion).

The company’s market capitalization bellies its size and global reach, with a payroll of 546,000 people in more than 90 countries making it world No. 1 in security by headcount, and nine times bigger than Garda, which has 62,000 staff. Only Stockholm-based Securitas AB is larger by sales.

Africa Attacks

It’s not clear whether the Canadian firm’s mooted offer is for all or part of G4S. A bid for the whole company “seems a stretch” given the relative size of the pair, Jefferies International analyst Kean Marden said in a note. G4S has pro forma revenue of 7 billion pounds versus the equivalent of 2 billion to 3 billion pounds at Garda, while the U.K. company has a lower leverage, he said.

G4S began weighing the future of its cash-transportation arm last year after the business was hit by the waning use of notes in developed markets and a wave of attacks on armored trucks in South Africa. Suggested options included an initial public offering, and the company said on March 12 that it had also received unsolicited bid interest in the operation that it planned to evaluate. RBC Capital said last year that the unit could be worth 1.57 billion pounds.

Garda, Canada’s largest security company, was taken private by founder Stephan Cretier and Apax Partners in 2012. The private-equity firm’s stake was then bought out in 2017 by a group led by Cretier, along with funds affiliated to Rhone Capital.

Bungled Contract

G4S has been working for years to restore its reputation in the U.K. after bungling a contract to guard the 2012 Olympic Games in London when it failed to supply enough security staff, forcing the government to deploy members of the armed forces.

More recently the company was expelled from running the main prison in Birmingham, Britain’s second-biggest city, after the institution was deemed dangerous for staff and inmates, and it was forced to pay $130 million earlier this year after a U.S. court found that 13,500 guards in California weren’t provided with adequate meal breaks or accurate wage statements.

Under U.K. takeover rules, Garda World has until May 8 to make a firm offer for G4S or walk away. London’s Evening Standard newspaper reported the possible bid interest earlier.

--With assistance from Kit Rees and William Canny.

To contact the reporter on this story: Lucca de Paoli in London at gdepaoli1@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Christopher Jasper

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