G4S to resume divi payments in 2021; Rejects GardaWorld bid again

Private security firm G4S, currently fending off a £3bn takeover bid from smaller rival GardaWorld, said it planned to resume dividend payments next year and urged shareholders once again to reject overtures from its unwanted suitor.

In a letter to shareholders G4S chair John Connolly called GardaWorld’s offer “wholly inadequate”. To bolster his case, Connolly said G4S “continued to trade well” since reporting underlying earnings for the nine months to September 30 were ahead year on year.

“This performance together with contracts won and retained, with an annual value of £2.5bn, and a strong pipeline of additional opportunities provide us with substantial confidence in the outlook for 2021,” he said.

Private equity-backed GardaWorld, which is smaller and looking to continue its rapid expansion, has been circling G4S for months and made multiple offers, without success.

“GardaWorld is seeking to use G4S’s strong balance sheet and healthy cash flows to finance their purchase of your company. Furthermore they are capitalising on the impact of Covid-19 on UK equities to make an opportunistic and wholly inadequate offer,” Connolly said.

G4S is also weighing a potential offer from California-based Allied Universal Security Services, which indicated that it might offer at least £3.3bn – rejected by the UK-based target.

Gardaworld was taken over by private equity outfit BC Partners in 2019 and Connolly said the Canadian firm would cash in on “the global scale that G4S would provide and from very significant operational and financial synergies”.

“The offer captures these benefits for BC Partners and GardaWorld, without providing you, the owners of G4S, with fair value.”

“Acquiring G4S at a significant discount to fair value would quite simply allow BC Partners and GardaWorld to acquire a global leader in security at your, our shareholders’, expense.”

A GardaWorld spokesperson swiftly hit back at Connolly's remarks, claiming "any value created in G4S’s shares since June has happened only because of us”.

“After 39 days, shareholders only merit ‘aspirational’ targets, not forecasts. And now, jam the day after tomorrow. Shareholders should be alarmed that their funds are earmarked to promise an unspecified size and policy on dividends, resuming a year later than G4S’s peers," they added.

“G4S has no future under a senior management team that routinely misses targets, paying unsustainable dividends fuelled by debt and disposals. Ours is a programme of growth and investment in G4S, offering the expertise and energy to solve its problems."