29th Oct 2020 11:02
(Alliance News) - G4S PLC on Thursday updated its medium-term financial targets as it advised shareholders to reject a 190 pence per share takeover offer made by Montreal-based Garda World Security Corp, labelling the bid "highly opportunistic".
Shares in G4S were trading 0.2% lower at 205.20 pence each on Thursday morning in London. The stock traded below 70p in April.
In September, the board of the FTSE 250-listed security services provider rejected Garda World's cash offer saying it undervalued the company. However, in October, Garda World directly approached G4S PLC shareholders with the same GBP3 billion offer. This came after G4S confirmed a buyout approach by US security and facility services company Allied Universal Security Services LLC.
On Thursday, G4S Chair John Connolly said Garda World's "unattractive and opportunistic offer" is nowhere near a full and fair price. He said the price offered fails to reward shareholders for the substantial financing synergies that would accrue to GardaWorld by gaining access to G4S's balance sheet and cash flows.
G4S also noted it believes GardaWorld and its majority shareholder BC Partners "desperately need" G4S in order to realise their ambitions, noting that BC Partners now has a controlling interest in a business that has been "heavily loss-making and lacks financial strength".
"GardaWorld's record is one of a loss-making company which has reported net losses attributable to shareholders of CAD940 million in the past three years, and it lacks the geographic coverage to be a truly global company. GardaWorld clearly needs a transformative acquisition in order to realise its aspiration to be a global company and this is simply not reflected in its offer of 190 pence per share," G4S said earlier in October.
Separately, G4S on Thursday upped its financial targets, aiming to generate more than GBP1 billion of free cash flow over the next five years and to pay sustainable dividends with 2.0 times cover "once the uncertainty surrounding the pandemic has reduced to an acceptable level". It added it also aims to grow revenue by between 4% to 6% per year, targeting profit margins before interest, tax and depreciation of 7%.
"Your board believes that G4S has a bright future as an independent company underpinned by our position as a global leader in security, clear financial targets, resilient trading performance this year and 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. Furthermore, in all of its communications GardaWorld has been conspicuously non-committal about the future of G4S's non-UK employees, which represent around 95% of our workforce," Connolly added.
By Ife Taiwo; [email protected]
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