Advisers to G4S bidder GardaWorld in line for £312m payday


Advisers to Canada’s GardaWorld, the security group pursuing a £3bn deal to buy UK rival G4S, stand to make up to £312m in fees if they are successful in clinching shareholder support for the hostile takeover.

The fees were laid out in an offer document released by GardaWorld on Saturday, in which the Canadian group argued that its 190p per share offer for G4S was justified given the level of investment needed to address longstanding financial and reputational issues. 

Bankers including Barclays, UBS, Bank of America and Jefferies stand to earn as much as £100m in fees for providing financial advice and broking services should a deal be reached, GardaWorld said in the document. A further £180m would be paid to banks that provide the financing arrangements used to pay for the deal.

One senior London banker not involved in the transaction said that the financial advisory fees were unusually high, highlighting a series of similar private equity-backed transactions in the UK market where banks earned far less.

For legal work, lawyers on the deal led by Simpson Thacher may make up to £18m, while public relations advisers including London’s Montfort Communications stand to earn as much as £7m.

The lucrative fees at stake underscore the importance of the transaction to advisers in the London market, where mergers and acquisitions activity has been sluggish this year.

The offer caps weeks of bitter accusations from the smaller Canadian company, in which the private equity firm BC Partners owns a 51 per cent stake.

In the document, GardaWorld accused the UK company of having “baseless optimism” about its prospects and pledged to make sweeping “cultural change” if it takes control.

“Simply said, a cookie-cutter approach will not succeed in fixing G4S’s operations,” said Stephan Cretier, chief executive of GardaWorld. “This operation needs a deep root-and-branch reprogramming.” 

G4S, best-known for running prisons and providing security guards, is fighting to keep investors on its side after having rejected the 190p bid from GardaWorld last month.

Its largest investor Schroders has stated that it is open to a takeover at a higher price. The latest documents are a formal offer, but do not prevent GardaWorld from increasing its bid should it choose to do so. 

G4S said: “There is nothing new here. The terms of the offer remain unchanged from those contained in GardaWorld’s announcement on 30 September, which the board unanimously rejected on the basis that it significantly undervalues the company and its prospects and is not in the best interests of shareholders or other stakeholders.”

G4S has annual revenues of more than £7bn and employs more than 500,000 people in 80 countries, but it has been hurt by a series of scandals including the loss of a UK government contract to run Birmingham prison last year.

GardaWorld is a much smaller operation, with about £2bn of annual revenues and 100,000 employees, but it argues that G4S has been losing market share. 

It believes 190p is the right price because of G4S’s £300m pension deficit and because of potential future liabilities from legal actions taken against the company, it said. 

G4S said last week that it had received interest from a rival acquirer, Allied Universal, one of the largest operators in the US, the world’s biggest security market. It has yet to receive a formal offer and Allied has declined to comment.

Additional reporting by Kaye Wiggins

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