The battle for G4S heated up yesterday as its two biggest shareholders spurned a £3billion hostile takeover bid from a Canadian rival – but stressed they are open to a deal at a ‘fair price’.
Fund manager Schroders said it agreed with the security giant’s board that the 190p a share offer from Garda World ‘significantly undervalues’ the scandal-prone company.
The same offer was unanimously rejected by the G4S board just over a fortnight ago. But Schroders, with a 10.49 per cent stake, offered hope to Garda World by making it clear it is willing to engage in talks and is open to a takeover if it increases its bid.
Too low: Fund manager Schroders said it agreed with G4S’s board that the 190p a share offer from Garda World ‘significantly undervalues’ the scandal-prone company
G4S has appealed to shareholders to ‘take absolutely no action in relation to the unattractive and opportunistic offer’.
But Sue Noffke, Schroders’ head of UK equities, said: ‘As the largest shareholder in G4S, Schroders agrees with the G4S board that the 190p bid from Garda World significantly undervalues the company and its prospects.
‘However, we are prepared to engage and are open to a deal at a fair price for that more fully reflects peer multiples, synergies and other strategic benefits for an acquirer.’
The other top ten investors include Chicago-based investment firm Harris Associates, which has a 10.04 per cent sake, and Mondrian Investment Partners with a 5.07 per cent stake.
David Herro, of Harris Associates, said Garda World’s bid ‘does not come close to closing the gap between their offer and our measurement of intrinsic value for G4S’. But he added: ‘We would be open to a higher bid’.
Garda World is contacting shareholders directly in an attempt to win them over. It needs to secure a 90 per cent vote among investors to seal the deal.
Yesterday, the Canadian firm launched another attack on G4S in an attempt to persuade shareholders to accept the offer on the table.
The Montreal-based firm’s boss Stephan Cretier claimed he would ‘educate’ shareholders on how best to manage G4S.
And he dismissed protests from the company’s management that it is back on track following a series of scandals, that date back to the 2012 London Olympics when the army had to be drafted in after it failed to provide enough security guards.
When the hostile takeover bid was announced on Wednesday shares jumped above £2 for the first time since February.
They edged up again yesterday, rising 0.8 per cent, and are up almost 40 per cent since news of the £3billion takeover bid emerged just over two weeks ago.
G4S declined to comment.
The chairman who mentored Fred Goodwin
G4S chairman John Connolly owns more than 600,000 shares worth £1.16m
The chairman of G4S stands to make more than £1million if the Garda World takeover goes ahead.
John Connolly owns more than 600,000 G4S shares worth £1.16million at the 190p a share offer price.
The 70-year-old – whose chequered career includes the collapse of Barlow Clowes in the 1980s, and whose protege Fred Goodwin brought RBS to the brink of collapse – insists the bid ‘significantly’ undervalues the firm.
The former accountant is no stranger to controversy and has shown an uncanny knack for survival. Since he took over as chairman at G4S in June 2012, the company has been rocked by scandals, from its failure to supply enough security guards for the London Olympics to charging taxpayers for tagging offenders who were dead or back in prison.
But Connolly remains in his £382,000 a year job following a lucrative accountancy career.
As chief executive of ‘Big Four’ auditor Deloitte, he became Britain’s highest paid accountant in 2008 when he earned £5.7million.
That was the year that RBS imploded under Goodwin, who worked under Connolly at Deloitte.
When Goodwin became chief executive of RBS in 2001, one of his first acts was to award the contract to audit the doomed bank to Deloitte.
The collapse of investment broker Barlow Clowes in 1988 after massive fraud was one of the biggest City’s biggest ever scandals.
Connolly managed to brush off calls to resign and instead rose to become UK senior partner and chief executive of Deloitte.