GardaWorld faces huge fees in hostile takeover bid for G4S
London — Canada’s GardaWorld expects to incur as much as £305m in fees and expenses if it succeeds in its hostile takeover offer for UK rival G4S, according to offer documents published by the security group.
Garda, which made an almost £3bn hostile offer for G4S, could pay as much as £180m in financing fees if it succeeds in acquiring the UK firm, according to the documents published on Saturday. Fees incurred for financial advice could range anywhere between £1m and £100m, the Canadian company said.
Garda made a hostile takeover bid for G4S in September after failing to convince its management to come to the negotiating table. It has been seeking meetings with G4S shareholders to persuade them to accept the proposal, which G4S has rejected on the grounds that it undervalues the company.
If Garda succeeds in its offer, the deal could prove to be a windfall for its advisers at a time when merger & activity activity has been affected globally amid the coronavirus pandemic. Aside from financing and advisory fees for banks, legal expenses are expected to be £9m-£18m. Garda expects to pay as much as £7m for public relations advice, the documents show.
In its offer document, Garda alleged that G4S shareholders are being provided with “baseless optimism” and that there is a lack of “tangible outlook, profit forecasts or visibility towards dividend resumption” at the firm.
“There is nothing new here. The terms of the offer remain unchanged from those contained in GardaWorld’s announcement on September 30, 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,” a representative for G4S said.
A combination of Garda and G4S would create a global security firm with more than 600,000 employees, with about 500,000 coming from the latter. The firms provide guards to places including airports and prisons and have operations around the world.
G4S said last week it received takeover interest from competitor Allied Universal Security Services. Major G4S shareholders have so far been unconvinced by Garda’s cash offer. Harris Associates and Sachem Head Capital Management both view the bid as too low, Bloomberg News has reported.
Barclays, UBS Group, Bank of America Corporation and Jefferies Financial Group are advising Garda on the deal. Citigroup and JPMorgan Chase are advisers to G4S.
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