Shares in security firm G4S have surged by a quarter after a Canadian rival went public with a takeover bid worth almost £3bn.
Canada‘s GardaWorld (GW) , which walked away from talks over a similar offer for G4S last year, accused the board of its much larger opponent of refusing “meaningful discussions” following three separate approaches.
It said it wanted to force engagement but G4S later rejected the approach saying it “significantly” undervalued the business and its prospects.
Its statement said: “The board believes that the timing of the proposal is highly opportunistic, coming as it does at a time of severe turbulence in global financial markets.
“Furthermore the company’s financial performance following the outbreak of COVID-19 has been particularly resilient, as outlined in the company’s interim results for the six months ended June 30.”
GW, the world’s largest privately-owned security firm, has annual sales above £1.5bn compared to £7bn for its listed peer in the UK, while it employs 72,000 staff.
G4S has more than 500,000 workers.
Image: G4S has operations across more than 90 countries worldwide and is the largest-listed firm of its kind globally
The Montreal-based firm said its offer of 190p per share, valuing G4S at £2.96bn, represented a 30% premium to the London-based firm’s share price on Friday.
It accused the board of failing “its shareholders, employees, customers and the public for at least a decade” but said that it believed value could be returned.
GW’s founder and CEO, Stephan Cretier, said: “G4S needs an owner, not a manager. GardaWorld has 25 years of experience in the sector and we know how to improve and repurpose this business.
“As owner-operators, we believe that the combined business’s operations will offer a better future for all those who depend on G4S.
“We will turn G4S around, ensuring it delivers for its customers, its people and the public.
“The combination of GardaWorld and G4S is an important part of our strategy to create the world’s leading security services business. If successful, our commitment to the UK will be for the long-term.”
News of the hostile approach was welcomed by investors, with shares rising 25% to 182p by the close of trading.
Market experts said the offer reflected attraction in London stocks, which are yet to recover pre-coronavirus values and the relatively weak value of the pound.
Neil Wilson, chief market analyst at Markets.com, said: “Since the pandemic G4S’s valuation has made it more appealing, whilst revenues of about £7bn annually remain far ahead of GW.
“This will be the tiddler swallowing the whale.”