Troubled G4S turns down £1.6bn offer for cash arm
Security company rejects ‘opportunistic’ bid by private-equity group Charterhouse
Monday 28 October 2013
G4S, the world’s largest security company, yesterday rejected a £1.55bn bid for its cash-handling and management division from private-equity group Charterhouse.
Speculation gathered pace last week that G4S might sell the distinctive security vans and helmeted guards business for around £1bn.
G4S has remained under pressure over a series of bungled contracts with the UK Government, including its failure to deliver enough staff for last year’s Olympics which led to the departure of chief executiver Nick Buckles with a £1.2m pay-off in May.
Yesterday the firm said the Charterhouse offer, which it received almost a week ago, was “highly opportunistic” and that it’s board “believes the conditional offer fundamentally undervalues the business and its prospects”.
It went on to state: “The board consider the group’s cash-solutions services to be core to G4S’s operations and strategic plans.”
For once, the term ‘opportunistic’ has meaning in a bid rejection because new chief executive, Ashley Almanza (pictured), is due to give details of his plans for the group including cost-cutting on 5 November.
He raised £348m through a share placing in August and said at the time: “G4S is committed to invest in its core businesses, including cash solutions, which have strong opportunities for sustainable, profitable growth.
“The cash-solutions business is integral to G4S’s operations and strategic plans. It is unique in its scale and diversity, with unrivalled emerging markets exposure and strong characteristics.”
Cash handling accounted for around 18 per cent of G4S revenues last year as against 72 per cent from security. But analysts pointed out that the two business are closely linked, often operating out of the same premises in many places.
They also noted that the cash division’s profits should start rising as interest rates rise.
Along with the Olympics fiasco, G4S has been accused of charging the Government for electronic tagging of non-existent prisoners.
Yesterday, staff at Mangaung prison in South Africa, run by G4S, have been accused of abusing inmates. The company says it has seen no evidence of abuse by its employees.
“These are businesses that private equity loves – decent cash generation, higher returns,” said Panmure Gordon analyst Mike Allen.
“It’s quite a stable business really. It’s not produced to its full potential in recent years because of interest rates being so low.
“At the moment G4S need a business like that while they’re trying to find their feet when there’s so much uncertainty with the UK Government.”
G4S shares, which gained 10p last week, fell 1.3p to 257.2p as analysts pretty unanimously backed its rejection of the bid.
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