Garda mulls hostile bid after G4S rebuffs US$3.7b offer

[MONTREAL] GardaWorld is appealing to investors in UK security-services rival G4S to help force management to the negotiating table after making an unsuccessful bid worth about 2.9 billion pounds (S$5.09 billion).

Three attempts to engage with the board of G4S have been either dismissed or ignored, Montreal-based Garda said in a statement on Monday. The most recent offer stood at 190 pence a share, an 86 per cent premium to G4S's stock price on June 15, the day prior to its first approach.

"G4S needs an owner, not a manager," Garda chief executive officer Stephan Cretier said in the release. "As owner-operators, we believe that the combined business's operations will offer a better future." A combination between Garda and G4S would create a global security firm with more than 600,000 employees - with about half a million coming from the British company. The two firms provide guards to everything from airports to prisons and have operations around the world.

Garda previously considered an offer for G4S last year, before ruling out an approach. The Canadian company is 51 per cent owned by UK private equity firm BC Partners, which will finance the deal if an agreement can be reached. The rest of Garda is owned by Cretier and other management.

The company's business has proven resilient during the Covid-19 pandemic, Bloomberg Intelligence analyst Eshan Toorabally said in a note, as its services are mostly deemed essential and it has low exposure to struggling markets such as events and travel. The global security market is fragmented and has potential for consolitation, he added.

Mr Cretier is hoping to tempt G4S investors who have seen the share price tumble by almost 40 per cent this year. Yet he may face opposition from the UK government, which is wary of opportunistic foreign takeovers of British companies amid the Covid-19 pandemic.

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The CEO moved early to ease any concerns about job losses and said the combined group would be committed to the country. "Significant steps would be taken to address the company's persistent underfunding of UK pension obligations," he added.

BLOOMBERG