|Real-time Estimate - 11/27 11:30:00 am|
G4S plc: G4S Shareholders Advised to Reject GardaWorld Inadequate Offer
|10/29/2020 | 02:00am|
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.
FOR IMMEDIATE RELEASE
G4S Shareholders Advised to Reject GardaWorld Inadequate Offer
The letter from the Chairman of the
LETTER TO G4S SHAREHOLDERS FROM THE CHAIRMAN OF G4S
T :+44 (0)207 963 3100
On behalf of the
- G4S is a focused global leader in security, with leading market positions and outstanding technology capabilities;
- G4S has excellent prospects and is well positioned to accelerate profitable growth and deliver sustainable free cash flow;
- the timing of the Offer is highly opportunistic and significantly undervalues your business; and
GardaWorld & BC Partnersdesperately need G4S and are seeking to address GardaWorld’s weaknesses at your expense
Shareholders are strongly advised to take absolutely no action in relation to this wholly unattractive and opportunistic Offer.
G4S has been fundamentally repositioned to address long-term growth in global security markets
Today G4S is a focused global company with an unmatched market footprint, delivering strong operating and financial performance.
Through significant portfolio action over recent years, the Board and Management have fundamentally repositioned G4S as an industry-leading global security company, with 93% of our PBITA (from 76% in 2013) now derived from our Secure Solutions business. The successful sale of the majority of our Conventional Cash business in
Management has also resolved and settled a range of large complex legacy issues and onerous contract exposures, whilst implementing strong risk management controls and systems. As a result, there have been no new onerous contracts since 2013.
G4S operates in growing secure solutions markets and it does so from a position of great strength with an unmatched geographic presence, a strong global brand, market-leading operating capabilities and leading health and safety performance. Our strategic advantage is evident in the world’s largest and most competitive security market,
In recent years, Management has also created a market-disrupting business in Retail Cash Solutions, which has a very strong pipeline of orders and is growing rapidly and disrupting traditional cash services.
As a result of the investment we have made in Integrated Security and retail technology, G4S is able to offer industry-leading solutions to our customers and, as a result, already has higher margins than most of our security competitors. Our strategy and current performance give us confidence in our ability to further increase our margins.
We believe that the Company is extremely well-positioned to maximise future performance and that, as shareholders, you should be the ones to benefit both from our enhanced focus but also from the significant investment in recent years to strengthen our position, performance and prospects. These benefits are increasingly evident in G4S’s results, having retained and won contracts with an annual contract value of £2bn and achieved year-on-year growth in earnings during the first nine months of 2020. Delivering this performance in the midst of a devastating pandemic clearly demonstrates the strength of G4S and is a great tribute to the Management and employees of your company.
G4S has a clear set of strategic priorities to drive value for shareholders and key stakeholders
Following the significant re-shaping of the Company’s business portfolio in recent years, we now have an attractive business mix with a growing proportion of higher value integrated security services. Alongside this, G4S has made significant progress in reducing its direct and indirect costs and expects to deliver £100m of cost savings in 2020.
G4S is strongly positioned and, in line with our increased confidence, we are updating the Company’s medium-term financial targets:
i. Revenue growth at 4-6% per annum;
ii. PBITA margins of 7%(1);
iii. Free cash flow of >£1bn over the next 5 years (2021-25)(1);
iv. Sustainable dividends attaining 2.0x cover once the uncertainty surrounding the pandemic has reduced to an acceptable level (2); and
v. An investment grade balance sheet with leverage of 2.0x-2.5x net debt to Adjusted EBITDA
1 Aspirational target which should not be construed as a profit forecast or interpreted as such.
2 As stated in the H1 2020 Interim Results, dividend to resume once the uncertainty surrounding the pandemic has reduced to an acceptable level in line with our previously stated policy of attaining dividend cover of 2.0x and a progressive dividend thereafter.
Our confidence in delivering these updated targets is underpinned by the strength of our global blue-chip customer base and diverse pipeline supporting our revenue growth; by our growing capability in the delivery of higher margin Integrated Security; and by the digitisation of our operations and services.
G4S’s strategy and financial targets are consistent with an investment grade balance sheet and a prudent approach to leverage. G4S has continued to significantly strengthen its net debt to Adjusted EBITDA ratio to 2.58x as at
G4S also has a strong and long-standing relationship with its Pension Trustees, having made long-term and responsible contributions. The
As a responsible employer our priorities embrace sustainable investment to secure the health and safety of our employees and this is reflected in the tremendous improvement in our health and safety performance over the past seven years.
GardaWorld’s Offer significantly undervalues your company – it is nowhere near a full and fair price
The timing of GardaWorld’s proposal is highly opportunistic and significantly undervalues your company.
In stark contrast,
In addition, the
i. fails to provide G4S shareholders with fair value for the significant operating synergies available to GardaWorld across overlapping geographies and the combined cost base of £8.7bn; and
ii. fails to reward shareholders for the very substantial financing synergies that would accrue to GardaWorld by gaining access to G4S’s balance sheet and robust, diverse cash flows.
BC Partners’ acquisition valued GardaWorld at
GardaWorld also lacks global scale and coverage and acquiring G4S at a discount to fair value would allow them to own a clear global leader in security – at your expense.
GardaWorld has quite simply failed to articulate why your company’s employees and stakeholders should support an acquisition that would be over ten times the size of GardaWorld’s largest acquisition to date. Furthermore, in all of its communications GardaWorld has been conspicuously non-committal about the future of G4S’s non-
TAKE NO ACTION
Your Board believes that G4S has a bright future as an independent company underpinned by:
i. Our position as a global leader in security;
ii. Clear financial targets;
iii. Resilient trading performance this year; and
iv. Re-rating potential now the business is refocused,
all of which we believe will contribute to significant shareholder value well in excess of the Offer.
Your Board, which has been so advised by Citi, J.P. Morgan Cazenove, Goldman Sachs and Lazard (the “Financial Advisers”) as to the financial terms of the Offer, believes that GardaWorld’s Offer significantly undervalues G4S. In providing their financial advice to the Board, the Financial Advisers have taken into account the Board's commercial assessments. Citi is providing independent financial advice to the
Accordingly, the Board unanimously recommends that you reject the Offer. Your Directors will not be accepting GardaWorld’s Offer in respect of their own beneficial shareholdings.
The rest of this document explains in more detail why we, the
Chairman of the Board of Directors
The Defence Circular can be accessed via www.g4s.com/GardaWorld and has been submitted to, and will be available from, the National Storage Mechanism. A presentation for analysts and investors will be available from 0715 hrs (
For further details of the sources of information and bases of calculation of the numbers set out in this announcement please refer to “Bases and Sources” in the Defence Circular.
For further enquiries, please contact:
|Director of Investor Relations||+44 (0) 207 9633189|
|Head of Media||+44 (0) 759 5523483|
|Press office||+44 (0) 207 9633333|
G4S Joint Lead Financial Advisers and Corporate Brokers
J.P. Morgan Cazenove
G4S Financial Advisers
Goldman Sachs International
G4S Legal Advisers
Notes to Editors
G4S is the leading global security company, specialising in the provision of security services and solutions to customers. Our mission is to create material, sustainable value for our customers and shareholders by being the supply partner of choice in all our markets.
G4S is quoted on the
Goldman Sachs International (“Goldman Sachs”), which is authorised in the
Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8 of the Code. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than
If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3 of the Code.
Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4 of the Code).
Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the
Rule 26.1 Disclosure
In accordance with Rule 26.1 of the Code, a copy of this announcement will be available at www.G4S.com, by no later than 12 noon (
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