GardaWorld, the Canadian security group behind a £3bn hostile takeover bid for G4S, has accused the company of “baseless optimism” about its prospects and pledged to make sweeping “cultural change” if it takes control, its latest salvo as it seeks the backing of shareholders.
Offer documents sent by GardaWorld to G4S shareholders on Saturday argue that its 190p-a-share bid — the same price at which it began the hostile campaign more than a month ago — is justified given the level of investment needed to address longstanding financial and reputational issues.
G4S, best-known for running prisons and providing security guards, is expected to reject the approach, though its largest investor Schroders has stated that it is open to a takeover at a higher price. The latest documents are a formal offer, but do not prevent GardaWorld from increasing its bid should it choose to do so.
“Simply said, a cookie-cutter approach will not succeed in fixing G4S’s operations,” said Stephan Cretier, chief executive of GardaWorld. “This operation needs a deep root-and-branch reprogramming.”
G4S said: “There is nothing new here. The terms of the offer remain unchanged from those contained in GardaWorld’s announcement on 30 September, which the board unanimously rejected on the basis that it significantly undervalues the company and its prospects and is not in the best interests of shareholders or other stakeholders.”
The offer caps weeks of bitter accusations from the smaller Canadian company, in which the private equity firm BC Partners owns a 51 per cent stake. If the deal were to go ahead, it is expected to launch a wave of consolidation in the fragmented security industry and would be one of the largest UK take-private deals in years.
G4S has annual revenues of more than £7bn and employs more than 500,000 people in 80 countries, but it has been hurt by a series of scandals including the loss of a UK government contract to run Birmingham prison last year.
GardaWorld is a much smaller operation, with about £2bn of annual revenues and 100,000 employees, but it argues that G4S has been losing market share.
It believes 190p is the right price because of G4S’s £300m pension deficit and because of potential future liabilities from legal actions taken against the company, it said.
G4S said last week that it had received interest from a rival acquirer, Allied Universal, one of the largest operators in the US, the world’s biggest security market. It has yet to receive a formal offer and Allied has declined to comment.
Additional reporting by Kaye Wiggins
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