GardaWorld is not ready to stop its pursuit of security firm G4S, despite G4S agreeing to sell its business to Allied Universal last night.
GardaWorld has given itself the option of increasing its bid for G4S following the £3.8bn deal with Allied Universal struck yesterday. GardaWorld had previously said its latest offer for G4S was final.
G4S on Tuesday agreed to a takeover by Allied Universal, picking the U.S. company over Canadian rival GardaWorld after a two-month long bidding war. It had rejected GardaWorld’s offer of 235 pence per share in favor of Allied’s bid, which was 10 pence higher.
GardaWorld said it had withdrawn a no-increase statement in relation to its G4S offer price, and is said to be considering options.
G4S said that GardaWorld’s latest announcement did not change its intention to unanimously recommend Allied Universal’s offer.
Some analysts expect GardaWorld to raise its bid for G4S, but they also said Allied Universal should have more cost synergies given its greater geographic overlap with G4S.
“Our sense from reading all of Garda’s documentation in recent months is that it strongly wants to acquire G4S. A further bid from Garda could maybe prompt a raised offer from Allied,” Panmure Gordon analyst Robert Plant said.
City A.M. has contacted GardaWorld for comment.
G4S’s deal with Allied Universal will incorporate a new company, Allied Bidco, that will be indirectly controlled by Allied Universal. The combination of Allied Universal and G4S will create a security business with revenues of approximately $18bn, should the deal go ahead.
GardaWorld has been making offers for G4S for months. The Canadian firm, which is significantly smaller than G4S, has raised the price of its bid four times since first approaching shareholders about a potential buy in the summer.
The dogged pursuit has at times descended into acrimony, with both sides seeking to convince shareholders of the weaknesses of the other.
Throughout, the G4S board has remained adamant that Gardaworld’s offers have “significantly undervalued” the firm, which provides services such as prison management.
Recently Gardaworld chief executive Stephen Crétier said: “[G4S] Shareholders have a simple choice: remain invested in a company which has consistently failed them and the wider community for so many years, or realise their investment in cash, at a significant and highly attractive premium.”
Gardaworld even hit out at Allied Universal last month, after it revealed to also be in talks with G4S.
“Unlike other real or imagined bidders, our financing is agreed, our offer is a matter of public record and our intent is serious,” Crétier said in a statement.