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G4S rebuffs Gardaworld’s takeover offer over claims it “significantly undervalues” company

City AM logo City AM 19/10/2020 Poppy Wood
a blue truck parked on the side of a road © Provided by City AM

G4S has dismissed Gardaworld’s hostile takeover bid, after the outsourcing giant claimed its 190p per share offer “significantly undervalues the company and its prospects”.

In a filing to the London Stock Exchange, G4S said its board had unanimously rejected Canadian rival Gardaworld’s offer because it was “not in the best interests of shareholders or other stakeholders”.

Read more: G4S profits swell due to tight cost control during coronavirus pandemic

The security giant, which employs around 533,000 people, argued that it is in a strong market position with a robust growth strategy that will see its share price rise beyond Gardaworld’s 190p per share offer.

“G4S has been fundamentally re-positioned and is a focused, industry-leading global security company,” the company said in a statement.

The security giant added that it has “an unmatched market footprint” within the outsourcing industry, which has “sustainable long-term growth dynamics”.

Gardaworld, which is 51 per cent owned by private equity fund BC Partners, last month sparked a bitter scramble with G4S after tabling a 190p per share offer for its FTSE 250 rival.

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G4S has rejected the bid, which would value the company at around £3bn, but repeatedly urged shareholders to ask the board to enter into negotiations.

The security firm, which is currently managing the UK’s coronavirus test centres, slammed Gardaworld’s offer as “highly opportunistic”, adding that it undermined the company’s “historic performance… and intrinsic value”. 

Gardaworld has already upped its bid twice, but investors have argued the 190p per share offer still undervalues the firm. Its shares closed at 208.9p last week.

“Gardaworld is a very highly leveraged business that has grown through a string of acquisitions and which has incurred net losses of C$940m over the past three years. We believe that Gardaworld needs G4S in order to realise its aspirations,” the company added.

It comes after Gardaworld yesterday boasted that it would pay up to £100m to Barclays, UBS, Jeffries and Bank of America for financial and corporate broking advice if its G4S bid proved successful.

In a takeover document published over the weekend, the Canadian firm said a further £180m could be handed to banks, lawyers and PR advisers overseeing the deal.

Read more: Gardaworld advisers set for £312m payday in G4S bid

Gardaworld boss Stephan Cretier slammed G4S for its “baseless optimism” and “history of operational missteps”.

“Simply said, a cookie-cutter approach will not succeed in fixing G4S’s operations,” he said. “This operation needs a deep root and branch reprogramming.”

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