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G4S shares rise on £3.7bn Garda takeover bid

Shares in British security firm G4S (LON:GFS) rallied on Tuesday, in response to a revised takeover bid made during a competitive acquisition battle between Garda World Security Corporation (TSE:GW) and Allied Universal Services LLC.

G4S said that it notes the recent announcement made by Garda, in which it stated that it had made an unsolicited and revised offer of 235p per share in cash to acquire the entire issued and to-be-issued share capital of G4S. Speaking on the news, the company said that its Board are in the process of evaluating the offer, with its legal and financial advisers, and told shareholders to take ‘absolutely no action’ in relation to the offer.

The revised proposal sees G4S being pegged at a £3.7 billion valuation, with Garda needing just over 50% of shareholders to agree for the deal to go ahead – versus 90% previously. Garda have also agreed a £770 million support package with the G4S pension trust, which was regarded as a decisive issue in the takeover bid.

The G4S statement added: “G4S continues to be in discussions with Allied Universal Services LLC. Any firm offer from Allied Universal would be required to be announced by 9 December 2020.  There can be no certainty that any firm offer will be made by Allied Universal nor as to the terms on which any such offer might be made by them.”

The Group said that a further update will be made in due course. Following the news, G4S shares rallied by 8.39%, up to 248.22p apiece. This price is the company’s highest since August 2018, and stands about 38% ahead of analysts’ consensus target price of 153.57p a share.

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Analysts currently have a consensus ‘Buy’ stance on the stock, while the Marketbeat community gives it a 57.12% ‘underperform’ rating. Its p/e ratio of 224.73 makes it look far pricier versus the service sector average of 38.53, while it has a dividend yield of 1.44%.