G4S shareholders approve £3.8 billion takeover bid by Allied Universal

The directors of British multinational security services company G4S plc “unanimously recommend” that those G4S shareholders who have not already done so should now accept the final Allied Universal offer for the business. That final offer will remain open for acceptance “until further notice”. At least 14 days’ notice will be given through an announcement before the final Allied Universal offer is then closed.

Allied Bidco has obtained (substantially) all of the required antitrust and regulatory approvals and foreign direct investment clearances in applicable jurisdictions and confirmed that, if any conditions remain outstanding on the final date under the Code by which the final Allied Universal offer must become wholly unconditional or lapse, it intends to waive such conditions.

Further, Allied Bidco expects that the final Allied Universal offer will become wholly unconditional on Tuesday 6 April 2021.

Commenting on this development, John Connolly (chairman of the G4S Board) stated: “We are pleased that a very large proportion of shareholders have accepted Allied Universal’s final offer. The G4S Board believes that the offer provides shareholders with an attractive premium, while also securing the future success of G4S for its employees, customers, pension scheme members and other stakeholders.” 

Connolly went on to add: “I would like to thank Ashley [Almanza, CEO of G4S] and his team together with all of our employees for the successful transformation of G4S in recent years. That transformation has made this transaction possible. I would also like to thank my fellow G4S Board members for their excellent work. Finally, I would like to thank all of our shareholders for their strong support.”

Global leader in security

Ashley Almanza responded: “The combination of G4S and Allied Universal creates the global leader in security with revenues of over $18 billion, underpinned by industry-leading talent and expertise and unmatched market coverage. This unique combination will offer customers exceptional service and provides employees with an exciting future. I would like to thank the Board and our shareholders for their support and colleagues across G4S for their outstanding contribution to the successful re-positioning of the business that has made this transaction possible. My team and I look forward to working with Allied Universal to support a successful integration of the two businesses.”

Formerly Group 4 Securicor, G4S is headquartered in London. The business was established back in 2004 when London-based Securicor amalgamated with Danish firm Group 4 Falck. Today, the company offers a range of specialist services, among them the supply of security personnel, monitoring equipment, response units and secure prisoner transportation. G4S also works with numerous Governments overseas to deliver bespoke security solutions.

Measured in terms of revenue, G4S is the world’s largest security company with operations in more than 90 countries. Upwards of 533,000 employees across the globe render the business the world’s third-largest private employer, in fact, as well as the largest European and African private employer. Additionally, G4S is among the largest of those firms presently listed on the London Stock Exchange. The organisation has a primary listing on the London Stock Exchange and is also a constituent of the FTSE 250 Index.

At present, G4S delivers security services for over 40 Embassies around the world, provides stewarding services at football stadiums and at other venues and also runs several British prisons. The company operates prisoner tagging schemes, assists within Government Communications Headquarters and also focuses on administrative roles for both the health and education sectors.

Bidding process

For the last two decades, Allied Universal has provided “unparalleled services, systems and solutions” for businesses across North America, Canada and also parts of South America. With a significant span of regional offices, the company’s national reach and local presence in the States “covers the nation”. Specifically, the business provides security guarding solutions, physical security, risk advisory and consulting services and integrated technology and security systems.

Earlier this month, Allied Universal – which was founded in 2016 on the back of the merger of AlliedBarton Security Services and Universal Services of America – completed the purchase of San Francisco-based Security Integration.

The other company in the running to acquire G4S has been Canadian firm GardaWorld, which badges itself as “the world’s largest privately-owned security services and cash services company”. In February, the Montreal-based company took the decision to “stay firm” with its previously announced increased cash offer (made through its wholly-owned subsidiary Fleming Capital Securities Inc) at 235 pence per share to acquire the entire issued (and to be issued) share capital of G4S plc.

As a result of that decision, GardaWorld’s increased offer was final and wouldn’t be subject to revision. That revised bid was up 24% from the company’s previous 190 pence per share offer which valued G4S at £3 billion.

Stephan Crétier (founder, chair, president and CEO of GardaWorld) explained: “There can be no better owner for G4S than GardaWorld, but we are disciplined buyers and we will not overpay for a company with systemic environmental, social and governance issues that continue to come to light.”

Crétier continued: “GardaWorld has the skills, expertise and ambition to take on the challenges that G4S faces. We understand the people-oriented nature of our industry. We have a deep understanding of complex operating environments and also a successful track record of profitably growing businesses. However, a successful integration of G4S, itself a 530,000-strong employee platform operating in 80-plus countries, would require sizeable resources. Addressing its issues would demand greater investment and, without satisfactory engagement from G4S, we have been unable to complete our due diligence.”

In conclusion, Crétier observed: “In light of the above, we’ve concluded that, priced above 235 pence per share, there are better and less risky opportunities available to GardaWorld. We will continue to capture such opportunities as we actively pursue our growth as a value-added partner of choice in the security and specialised services space.”

Contract decision

Allied Universal’s ‘triumph’ in the bidding process is construed by certain commentators to be somewhat awkward for the Conservative Government as it means the latter will now have to re-evaluate and re-assign its contract for security and management services at four major British prisons which had already been awarded to G4S. Allied Universal has stated that it doesn’t wish to continue with that contract.

G4S – which has been advised through the process by lead advisors Citigroup and JPMorgan Cazenove – reported a £91 million loss for 2019 after the company was forced to write down the value of its cash handling business. Recently, the organisation also announced plans to cut upwards of 1,000 jobs in a determined bid to reduce costs.