G4S faces £3bn hostile takeover bid from private equity-backed group

UK security company has ‘dismissed or ignored’ 3 approaches in 3 months, says BC Partners

The UK security group G4S is facing a £3bn hostile takeover bid backed by the private equity firm BC Partners, which is calling for shareholders’ support after the FTSE-listed company rebuffed its approaches three times in three months. 

Montreal-based GardaWorld, in which BC Partners owns a 51 per cent stake, offered 190p per share on August 31, an equity value of £3bn, it said in a statement on Monday. 

The bidders urged G4S shareholders to force its board into talks with them, saying they had repeatedly been “summarily dismissed or ignored” after an initial approach on June 15. It is rare for private equity firms to threaten a hostile approach. 

A successful deal would be one of the largest UK take-privates in recent years and is critical to a strategy plotted by BC Partners, which has been planning to buy G4S since it invested in GardaWorld last year, according to a person familiar with the matter. 

“This is a rescue bid. We’re here to make the pain go away for shareholders,” Stephan Crétier, founder and chief executive officer of GardaWorld, told the Financial Times.

He said he had “one objective”, which was “to build a global champion, a world leader in security”, and that his offer represented “a whopper of a premium”.

This is an offer that we believe your shareholders would consider very seriouslyLetter to G4S chairman John Connolly

“I’m not going away unless the shareholders tell me,” he added. “We are going to do the maximum to convince shareholders [to back a deal].”

G4S responded on Monday that its board had unanimously rejected the offer because it “significantly undervalues the company and its prospects”.

The bid was “highly opportunistic, coming as it does at a time of severe turbulence in global financial markets”, it said, adding that it advised shareholders to “take absolutely no action” in relation to it.

G4S shares surged 25 per cent to 182.45p by late afternoon in London on Monday after the security company announced the move.

“This is an offer that we believe your shareholders would consider very seriously,” BC Partners’ chairman Raymond Svider and Mr Crétier said in a letter to G4S chairman John Connolly on August 31. “You can now choose to engage, which we hope you will do and would welcome, or not.” 

The deal would be funded with equity from BC Partners and debt that three banks had already agreed to provide, the letter said. 

If a deal went through, it would be among the 10 largest UK take-privates in the past five years according to Refinitiv data, behind Advent International’s £4bn acquisition of Cobham and the $6bn purchase of the satellite company Inmarsat by a group led by Apax and Warburg Pincus.

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G4S shares tumbled at the beginning of the pandemic in February and March, hitting a low of just under 70p in early April, but have since regained some of their value.

GardaWorld abandoned a £3bn takeover approach for G4S in May last year. BC Partners bought its stake in the Canadian business just over two months later, with the intention of reviving the G4S deal, a person with knowledge of the matter said. 

G4S is one of the UK’s biggest outsourcing companies, with about 500,000 staff and global revenues of about £3.5bn. A merger with GardaWorld, which BC Partners valued at C$5.2bn when it bought its stake last year, would create a global security giant.

G4S has in the past seven years offloaded at least 49 businesses as it seeks to retrench and focus on security services such as CCTV and providing systems to control access to buildings.

That has brought it closer into line with its Canadian rival, which provides security guards and airport security staff as well as alarm systems for homes and offices. 

G4S has been seeking to rebuild itself following a series of crises starting with the London Olympics in 2012 when it failed to recruit enough security staff and the army had to be drafted in to compensate.

It recently won a deal to operate a new £252m prison in Wellingborough, Northamptonshire, despite a decision last year to strip it of a contract to manage Birmingham prison seven years early, after inspectors found it “exceptionally violent”.