G4S, THE FTSE 100 outsourcing group, yesterday said it had rejected a £1.55bn offer from Charterhouse Capital Partners for its cash solutions business, claiming it undervalued the unit.
The company said that it regarded the private equity firm’s offer as “highly opportunistic” and rejected it due to “the strategic importance of the cash solutions businesses to G4S and because... the conditional offer fundamentally undervalues the business and its prospects”.
The cash solutions industry as a whole tends to struggle when interest rates are low, so it is understood that G4S expects the value of the business to grow more than Charterhouse’s offer price acknowledged, once the industry picks up.
It is thought that G4S would consider other offers for the unit, but the price would have to be high enough to justify pulling the parts of the business apart.
The company is currently run by regional and country heads, so the security and cash solutions units are not separate entities.
G4S has embarked on a turnaround plan this year to rescue its reputation after its security business was plagued with a series of scandals, including the botched handling of the London 2012 Olympic Games contract. Yesterday G4S denied allegations that its workers had abused prisoners at a South African facility previously run by the firm.
Shares closed 0.5 per cent lower at 257.20p.
JP Morgan and Citi are retained advisers to G4S and helped them see off the takeover approach from private equity firm Charterhouse Capital Partners.
The JP Morgan team is led by head of corporate broking Edmund Byers, alongside vice president Andrew Truscott and head of UK equity capital markets Greg Chamberlain.
Corporate financier Byers is on the Dealmaker of the Year shortlist at this year’s City A.M. Awards. He steered the industrial group Invensys through a rocky period as a long-term adviser and earlier this year led it towards a £3.4bn sale to Schneider Electric.
Also in 2013, Truscott advised construction and services group Kier on its takeover offer for road maintenance group May Gurney.
The Citi team is headed up by chairman of corporate broking Nigel Mills, with other key members of the team including Charlie Lytle and Anna Reynolds.
Mills was previously chief executive of Hoare Govett’s corporate broking unit, but joined Citi in 2005 to help the bank win more British clients. Mills and Lytle previously advised telecoms group Vodafone on its acquisition of Cable & Wireless.