Canadian security company GardaWorld offers £3 billion to buy U.K.-listed rival G4S - MarketWatch

Shares in G4S soared almost 25% on Monday, after Canadian rival GardaWorld said it had offered almost £3 billion ($3.87 billion) to take control of the U.K.-listed security firm and pressed G4S investors to back the proposed bid.

Montreal-based GardaWorld said it had offered to pay 190 pence a share in cash for G4S on Aug. 31, but that its attempts to engage with G4S’s board have now been “summarily dismissed or ignored on three occasions.”

“G4S needs an owner, not a manager. GardaWorld has 25 years of experience in the sector and we know how to improve and repurpose this business,” said Stephan Crétier, founder and chief executive officer of GardaWorld.

Paving the way for a hostile bid, he added: “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.”

Shares in FTSE-250-listed G4S rose 24.5% to 182 pence on Monday in early European trading.

The offer represents a premium of 32% to G4S’ closing share price of 144 pence on Aug. 28, and a premium of 86% to the closing share price on Jun. 12, the trading day prior to its first approach on Jun. 15, GardaWorld said.

“Given the starting price, the chequered past/management credibility, and the fact that many shareholders are long-suffering, we are very surprised that G4S hasn’t engaged with GardaWorld and would expect now to see pressure from shareholders to do so,” analysts at RBC Capital Markets said in a research note to clients.

They said that if the starting bid could be raised to 210/215p, there would be a reasonable chance of a deal, but cautioned that this could potentially trigger other bid interest to emerge. “We would not be selling the stock yet,” the analysts wrote.

In a letter to G4S chairman John Connolly, Crétier and private equity group BC Partners chairman Raymond Svider said: “This is an offer that your board should not ignore. This is an offer that we believe your shareholders would consider very seriously. It is definite, certain, in cash and fully financed.”

BC Partners bought a 51% stake in GardaWorld, which provides armored cars, cash-handling services and automated teller machine maintenance, in 2019.

GardaWorld said the deal would be financed by cash from BC Partners, while three banks—Barclays BARC, +4.33%, Bank of America BAC, -4.32%  and UBS UBS, -6.60%, have already received the necessary internal approvals to underwrite debt financing for the deal.

G4S has not yet responded to the statement by Garda.