G4S Plans Possible IPO of Armored-Truck Cash-Delivery Unit
(Bloomberg) -- G4S Plc is weighing an exit from a $1.5 billion cash-transportation business that’s been hit by waning use of notes in developed markets and a wave of attacks on armored trucks in South Africa.
A review of the division is expected to be completed next year, with the most likely options being an initial public offering or spinoff, Chief Executive Officer Ashley Almanza said on a call Thursday. The unit could be valued at about 1.57 billion pounds ($2 billion), according to RBC Capital. Shares of London-based G4S jumped the most in more than two years on an intraday basis.
The move comes after a reorganization of G4S at the start of this year, which divided the group into two arms focused on private security services and cash handling. Profitability in Cash Solutions has been on the wane as retailers in developed countries shift to digital payments, and partly due to surge in the number of attacks on its vans in South Africa, which has increased costs.
Developed markets account for about two-thirds of the cash business, which last year posted adjusted earnings before interest, tax and amortization of 160 million pounds. The company aims is to establish two strong, independent businesses, Almanza said. Competitors include Prosegur Cia. de Seguridad SA, Loomis AB, and Brink’s Co.
“The board believes that a separation of Cash Solutions has the clear potential to enhance the focus and success of both businesses and thus to unlock substantial shareholder value,” the company said.
The business, which accounted for about 16 percent of group revenue in 2017, operates across 45 countries topping up cash machines and transporting bills. G4S has been investing in new technology to expand into new revenue streams, including in the U.S. where it’s secured retail giant Walmart Inc. as a customer for its cash counting and handling service.
Shares of the company surged as much as 10 percent, the biggest intraday gain since Nov. 2, 2016. The stock was trading up 9 percent at 199.80 pence as of 9:45 a.m. in London, lifting the group’s market value to 3.1 billion pounds.
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