Derek Pain: Takeover of G4S is a rumour – but one that can't be ignored

No Pain, No Gain

Corporate activity has provided very little fuel for the stock market since the credit crunch devoured the ambitions of many of the private equity groups that at one time stalked the land. Brewer Scottish & Newcastle was the last No Pain, No Gain portfolio constituent to succumb to a takeover strike. And its absorption occurred more than two years ago. Since then, the City has experienced occasional flurries of bid activity, but in the main the people that grew richer advising and arranging deals have endured much more subdued times.

Still, in the past two weeks there has been the occasional hint that G4S, the security group that was recruited to the portfolio as recently as last month, could be on a marauder's agenda. Should the rumours turn out to be true, it could represent the quickest takeover coup the portfolio has ever enjoyed. Over the years it has delivered some notable bid successes. Allied Domecq, Burtonwood, La Tasca and Merrydown are some of its other hits. But they would be outshone should a quick G4S offer materialise.

I am not holding my breath. Unfulfilled rumours often fly around. They are meat and drink to many dealers, hoping to make a quick turn. Nevertheless, stock-market gossip cannot be dismissed. I descended on G4S (the result of a merger between Group 4 and Securicor six years ago) at 264p a share. Considering recent stock-market gyrations, the shares have, allowing for the dividend being stripped out, put on a solid display. Their performance follows a good run in the past year when they climbed from 195p. In those 12 months prices in general made surprising headway. Even so, there is nothing in the G4S display to detract from the takeover theory.

However, with a £3.8bn capitalisation, only the mega-rich could express an interest. The most popular suggestion is that a consortium commanding an array of deep pockets and led by American investment house Kohlberg Kravis Roberts is on the prowl and has picked up some shares. G4S shares are fairly highly rated. According to the rumour mill, the bidder is prepared to offer a quite incredible 375p.

Mind you, the security group has much going for it and could well command an exotic price. Last year it produced pre-tax profits of £302.8m. This year's figure is expected to be not far short of £400m. With violence – both real and threatened – now seemingly an everyday occurrence, the trading outlook for the world's biggest security group, which spreads from providing cover for rock concerts to protecting government officials, should be excellent.

Two other, much smaller, portfolio constituents, have produced trading bulletins. Mears, has a capitalisation of around £255m; the much tinier SnackTime is valued at only £12.2m. Mears, a support services group involved in social housing and domiciliary care, talks of "strong trading" in its current year. New contracts continue to be won with 91 per cent of the current year's expected income and 77 per cent of next year's already in the bag. The shares were recruited two years ago at 272p. SnackTime says it will report on the year ended March in July. In the meantime it declared that profits should reach stock-market expectations - around £1.3m. Last year's figure was £202,000.

It's been a busy year for the group, supplying drinks and snacks through vending machines which are mostly aimed at factory, office and shop workers. Highlights were the £1.5m acquisition of its biggest rival, MBM Business Systems, and a £5.8m private placing at 170p a share. The extra cash was used to increase its network of vending machines and expand marketing operations. More acquisitions are almost certainly in the pipeline.

It seems SnackTime is continuing to fare well in its current year with chief executive Blair Jenkins saying "significant new business" has been gained and they are anticipating "strong growth". I recruited the shares in September at 119p. They are rarely traded and could, therefore, be subjected to violent swings. The company has displayed a willingness to sprinkle shares around the investment community and I would not be surprised if the next takeover involves the issue of more shares.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Arts and Entertainment
The Doctor and the Dalek meet
tvReview: Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
Arts and Entertainment
Diego Costa
footballEverton 3 Chelsea 6: Diego Costa double has manager purring
Life and Style
3D printed bump keys can access almost any lock
gadgets + techSoftware needs photo of lock and not much more
Arts and Entertainment
Inside the gallery at Frederick Bremer School in Walthamstow
tvSimon Usborne goes behind the scenes to watch the latest series
Life and Style
Silvia says of her famous creation: 'I never stopped wearing it. Because I like to wear things when they are off the radar'
fashionThe fashion house celebrated fifteen years of the punchy pouch with a weighty tome
Arts and Entertainment
Gregg Wallace in Summer's Supermarket Secrets
tv All of this year's 15 contestants have now been named
i100Steve Carell selling chicken, Tina Fey selling saving accounts and Steve Colbert selling, um...
Life and Style
A picture taken on January 12, 2011 shows sex shops at the Paris district of Pigalle.
newsThe industry's trade body issued the moratorium on Friday
Arts and Entertainment
Could we see Iain back in the Bake Off tent next week?
tv Contestant teased Newsnight viewers on potential reappearance
The slice of Prince Charles and Princess Diana's wedding cake and the original box from 29 July 1981
newsPiece of Charles and Diana's wedding cake sold at auction in US
The Ukip leader has consistently refused to be drawn on where he would mount an attempt to secure a parliamentary seat
voicesNigel Farage: Those who predicted we would lose momentum heading into the 2015 election are going to have to think again
Arts and Entertainment
Cara Delevingne made her acting debut in Anna Karenina in 2012
film Cara Delevingne 'in talks' to star in Zoolander sequel
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Law Costs

    Highly Attractive Salary: Austen Lloyd: BRISTOL - This is a very unusual law c...

    Network Engineer (CCNP, CCNA, Linux, OSPF, BGP, Multicast, WAN)

    £35000 per annum: Harrington Starr: Network Engineer (CCNP, CCNA, Linux, OSPF,...

    DevOps Engineer (Systems Administration, Linux, Shell, Bash)

    £50000 per annum: Harrington Starr: DevOps Engineer (Systems Administration, L...

    Data Scientist (SQL, PHP, RSPSS, CPLEX, SARS, AI) - London

    £60000 - £70000 per annum: Harrington Starr: A prestigious leading professiona...

    Day In a Page

    Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

    A fresh take on an old foe

    Doctor Who Into the Dalek more than compensated for last week's nonsensical offering
    Ukraine crisis: The phoney war is over as Russian troops and armour pour across the border

    The phoney war is over

    Russian troops and armour pour into Ukraine
    Potatoes could be off the menu as crop pests threaten UK

    Potatoes could be off the menu as crop pests threaten UK

    The world’s entire food system is under attack - and Britain is most at risk, according to a new study
    Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

    Gangnam smile: why the Chinese are flocking to South Korea to buy a new face

    Seoul's plastic surgery industry is booming thanks to the popularity of the K-Pop look
    From Mozart to Orson Welles: Creative geniuses who peaked too soon

    Creative geniuses who peaked too soon

    After the death of Sandy Wilson, 90, who wrote his only hit musical in his twenties, John Walsh wonders what it's like to peak too soon and go on to live a life more ordinary
    Caught in the crossfire of a cyber Cold War

    Caught in the crossfire of a cyber Cold War

    Fears are mounting that Vladimir Putin has instructed hackers to target banks like JP Morgan
    Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years

    Salomé: A head for seduction

    Salomé's feminine wiles have inspired writers, painters and musicians for 2,000 years. Now audiences can meet the Biblical femme fatale in two new stage and screen projects
    From Bram Stoker to Stanley Kubrick, the British Library's latest exhibition celebrates all things Gothic

    British Library celebrates all things Gothic

    Forthcoming exhibition Terror and Wonder: The Gothic Imagination will be the UK's largest ever celebration of Gothic literature
    The Hard Rock Café's owners are embroiled in a bitter legal dispute - but is the restaurant chain worth fighting for?

    Is the Hard Rock Café worth fighting for?

    The restaurant chain's owners are currently embroiled in a bitter legal dispute
    Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival

    In search of Caribbean soul food

    Caribbean cuisine is becoming increasingly popular in the UK ... and there's more to it than jerk chicken at carnival
    11 best face powders

    11 best face powders

    Sweep away shiny skin with our pick of the best pressed and loose powder bases
    England vs Norway: Roy Hodgson's hands tied by exploding top flight

    Roy Hodgson's hands tied by exploding top flight

    Lack of Englishmen at leading Premier League clubs leaves manager hamstrung
    Angel Di Maria and Cristiano Ronaldo: A tale of two Manchester United No 7s

    Di Maria and Ronaldo: A tale of two Manchester United No 7s

    They both inherited the iconic shirt at Old Trafford, but the £59.7m new boy is joining a club in a very different state
    Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

    Robert Fisk: No victory for Israel despite weeks of devastation

    Palestinians have won: they are still in Gaza, and Hamas is still there
    Mary Beard writes character reference for Twitter troll who called her a 'slut'

    Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

    The Cambridge University classicist even wrote the student a character reference