Securicor merger to unlock £1.7m shares chest

Securicor's top four directors are set to cash in on a £1.7m bonus pool following the company's merger yesterday with Group 4 Falck of Denmark to create the world's second biggest security company.

The deal will produce a combined business spanning security vans, guard patrols and private prisons with a turnover of £3.8bn, 340,000 employees in 108 countries and a market capitalisation of about £1.6bn, putting it within striking distance of the global market leader Securitas.

Under the terms of the nil-premium merger, Group 4 Falck shareholders will emerge with 57.5 per cent of the enlarged business while Securicor shareholders will get 42.5 per cent. Although both the chairman and chief executive of the new company, Group 4 Securicor, will initially come from the Danish side, the business will have its headquarters in the UK and Nick Buckles, Securicor's chief executive, will take over as chief executive of the combined entity "at the appropriate time".

Mr Buckles and his three fellow executive directors at Securicor, the finance director Trevor Dighton, the human resources director Irene Cowden and the company secretary Nigel Griffiths have been conditionally awarded 1.33 million shares worth £1.7m in the company's performance share plan. A proportion of these are expected to vest when the merger is complete.

However, the Securicor directors are expected to retain their existing share options and swap them for options in the new company after the merger. Mr Buckles has 1 million share options which are showing a paper profit of about £135,000.

Shares in the companies climbed yesterday on confirmation of the merger, news of which leaked at the beginning of the month. Group 4 and Securicor rose in value by 7 per cent, giving the combined group a market capitalisation of £2bn. Before the merger takes place, Group 4 Falck intends to spin-off its rescue and safety business and its GSL division, which guards the UK government spy centre GCHQ, into a new company worth about £300m to £400m.

The combined group expects to make cost savings of £35m a year by closing down overlapping depots and corporate offices with the loss of about 500 jobs. The one-off cost of achieving these will be £55m.

The merger could run into competition hurdles in Holland, Luxembourg and Hungary where the combined group will have very high shares of the markets for manned security and security vans. But Mr Buckles said he was confident the deal would get through its vetting by EU competition authorities without Brussels demanding any disposals.

The companies aim to complete the merger between July and September.