UK security firm G4S (GFS.L) has received a £3bn ($3.8bn) hostile takeover bid from its Canadian rival GardaWorld that has led to massive gains for the London-listed firm.
The stock has been surging in early trading after the prospective bidder confirmed the move. At 2pm UK time the shares were trading up nearly 25% at 182.25p.
Officials with GardaWorld (GW) said they were willing to pay 190p a share in cash. The company had also made three previous attempts between June and August.
In a statement, GardaWorld said its “attempts to engage with G4S’s board have now been summarily dismissed or ignored on three occasions.”
“Consequently, GardaWorld now encourages G4S’s shareholders to mandate their board’s engagement in collaborative discussions towards a transaction that would be of clear and immediate benefit to G4S’s shareholders, customers, employees and members of the company’s pension schemes,” said the company.
G4S, however, has told its shareholders “not to take any action.”
In a statement issued on Monday it said: “Following careful consideration, together with its financial advisers, the board of G4S unanimously rejected the new proposal on 12 September 2020, on the basis that it significantly undervalues the company and its prospects.
“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. Furthermore the company’s financial performance following the outbreak of COVID-19 has been particularly resilient, as outlined in the company’s interim results for the six months ended 30 June 2020, issued on 23 July 2020.
“A further announcement will be made by the company in due course.
“Shareholders are strongly advised to take absolutely no action in relation to the new proposal.”
Market analysts, however, are taking keen interest in the stand off between G4S and GardaWorld.
“There was chatter about a deal last spring which came to nothing, but it looks more serious this time,” said Neil Wilson, chief market analyst at Markets.com. “Since the pandemic G4S’s valuation has made it more appealing, whilst revenues of about £7bn annually remain far ahead of GW. This will be the tiddler swallowing the whale.”
GardaWorld was founded more than 25 years ago, and is the largest privately owned security services and cash handling firm in the world. It employs more than 102,000 people globally, and has 450 offices across 45 countries.
“G4S needs an owner, not a manager,” said GardaWorld boss Stephan Cretier. “GardaWorld has 25 years of experience in the sector and we know how to improve and repurpose this business.”
“As owner-operators, we believe that the combined business’s operations will offer a better future for all those who depend on G4S. We will turn G4S around, ensuring it delivers for its customers, its people and the public.”
GardaWorld said the takeover would be equity financed by a group led by BC Partners, its 51% shareholder.