GardaWorld clears competition hurdles in hostile bid for G4S
Canadian group says there will be no regulatory investigations in US and Canada
GardaWorld has cleared competition hurdles in the US and Canada in its £3bn hostile takeover bid of UK security company G4S as it steps up attempts to persuade shareholders to back its offer.
The Montreal-based security group said there would be no further investigation of its 190p bid by the Federal Trade Commission and Department of Justice after regulatory deadlines had passed.
Stephan Crétier, founder and chief executive of GardaWorld, said the company was pleased to “have cleared North American antitrust reviews swiftly and without conditions” in its acrimonious battle for its UK rival, the world’s largest security group.
But he said any offer from Allied Universal, which has made a higher, tentative 210p-a-share offer, would raise competition issues because it would give the combined entity a 70 per cent share of US security contracts.
“We believe the antitrust challenges faced by an Allied/G4S combination will delay shareholders realising value if at all.”
Allied Universal, a US security group backed by Canadian pension fund Caisse de Dépôt et Placement du Québec and Warburg Pincus, declined to comment.
However, GardaWorld still has to convince G4S investors to support its offer after just 0.16 per cent of the UK’s group’s shareholders voted to accept its bid, a level the British company described as “derisory”.
The Canadian group, which is backed by private equity firm BC Partners, extended its offer period by three weeks from Sunday.
The Allied Universal bid has also been rejected by the UK security group, but the company has until December 9 to come back with a higher offer.
Mr Crétier added: “We cannot believe that Allied’s major shareholder, Caisse de Dépôt et Placement du Québec, would back a deal to buy a business blacklisted by other ESG-focused investors and accused of human rights violations and assisting the Taliban.”
CDPQ said it was “surprised” by the comments as GardaWorld had approached it to help fund its bid for G4S in the summer. It said its board had agreed a $1bn deal but GardaWorld had then changed its mind.
“There is something fundamentally inconsistent in Garda’s hostile and aggressive approach in the public sphere,” CDPQ said. “One day it wants to acquire G4S and the next it is criticising the ESG aspects of the company it wants to buy.”
Allied Universal employs 200,000 staff in the US, Mexico and Canada. It is the largest player in the $25.1bn US market, with a 33 per cent share, followed by Securitas at 18 per cent, G4S at 9 per cent and GardaWorld at 2 per cent, according to industry figures. The rest of the market is highly localised and fragmented.
Any market share above 35 per cent is viewed to be significant and to attract the attention of regulatory authorities in the US, advisers to GardaWorld said.
The latest moves follow weeks of bitter accusations between GardaWorld and G4S after the Montreal-based company first made its formal bid for the UK security company, which has annual revenues of £7bn and employs 530,000 people in 80 countries.
GardaWorld added that a deal with Allied would result in “higher prices for customers and poorer pay and conditions for employees”, as well as costing “millions of pounds in fees and delay payments to shareholders for six to nine months”.
However, offer documents from GardaWorld reveal that advisers to the company, including UBS and Barclays, stand to make £312m in fees if they are successful in clinching shareholder support for their hostile takeover.
GardaWorld has 102,000 staff and £2.1bn in revenue. It has been on a dealmaking spree, adding nine businesses in the year to January 2020.