18th Dec 2007 07:00
18 December 2007
G4S plc
Acquisition of Global Solutions Limited ("GSL") by G4S plc ("G4S")
G4S plc, the international security solutions group, is pleased to announce the acquisition of the entire issued share capital of GSL, through its holding company De Facto 1119 Limited ("De Facto"), for a total consideration of ‚£355 million, payable in cash on completion. This comprises a payment of approximately ‚£158 million for the entire issued share capital of De Facto and the assumption of a maximum of ‚£197million of net debt and working capital.
GSL is owned by private equity firms Cognetas and Englefield Capital and the management team and is an international leader in the provision of support services for governments, companies and public authorities. G4S's acquisition of GSL is based upon a compelling strategic rationale:
* GSL provides additional expertise to G4S in key markets such as the Government sector and provides G4S with opportunities to broaden its secure outsourcing offer to its customers * GSL provides additional scale to G4S's existing Justice Services activities, particularly in the UK adult and juvenile custodial, secure escorting, immigration and police sectors * GSL provides G4S with an excellent platform for the international development of Justice and other Government services in South Africa, Australia and Ireland * The combined Justice Services business is well placed to secure additional contract wins from the expected medium term pipeline as the public sector continues to expand the breadth and depth of its outsourced activities * GSL provides G4S with significant additional outsourcing credentials in the UK, supporting the G4S strategy of expanding further into the long term Government and commercial outsourcing sectors * GSL's long-term contractual relationships provide a strong underpinning to future revenue and profit streams
G4S expects the acquisition to result in annual running rate cost synergies of not less than ‚£7 million and to be earnings enhancing in 2008. G4S expects the post tax return on invested capital (ROIC) to exceed the group's weighted average cost of capital (WACC) within three years of completion.
In the financial year to 31 December 2006, De Facto generated sales of ‚£402.4 million, reported a loss on ordinary activities before tax of ‚£(21.3) million and had gross assets of ‚£247.3 million. For the year ending 31 December 2007, GSL is expected to generate sales of ‚£423 million and adjusted EBITA of ‚£30 million.
The acquisition is subject to approval from the European Commission and the South African Competition Commission. The acquisition is a Class 2 transaction for G4S under the Listing Rules and is expected to complete following the receipt of such approvals in 2008.
Commenting on the acquisition, Nick Buckles, Chief Executive Officer of G4S plc said:
"The early phases of development for G4S successfully focused on integrating two organisations, delivering synergy benefits and spreading best practice across the service lines - at the same time we have continued to drive margin improvements and growth across the businesses.
In November we outlined the main elements of the next phase of our strategy which are to build increasing partnerships with our customers in key sectors such as Governments, where we become their secure outsourcing partner of choice.
The acquisition of GSL fits right into the heart of our strategy and is typical of our plans to acquire expertise in key service lines and sectors, enabling us to further develop our offer to our customers. Over time, we expect to move towards a higher proportion of long term, recurring revenue contracts with G4S taking a broader range of responsibility for customers' risk management and protection. The addition of GSL to our organisation is a significant step in this next phase of development."
For further enquiries, please contact:
G4S plc
Nick Buckles, CEO +44 (0)1293 554400
Trevor Dighton, CFO
Debbie McGrath, Group Communications Director
Media Enquiries:
Kevin Smith, Citigate Dewe Rogerson +44 (0) 7973 672649
An investor and analyst conference call is taking place today at 09.00hrs (UK time). The dial in number is +44 (0)20 7162 0125. A slide presentation to accompany the call is available via the G4S web site at www.g4s.com.
Notes to Editors:
G4S plc
G4S plc was formed in July 2004 by the merger between Securicor plc and Group 4 Falck A/S's security business and is listed on the London and Copenhagen Stock Exchanges. G4S currently has a market capitalisation of approximately ‚£2.7 billion.
G4S operates in over 110 countries throughout the world and employs over 500,000 people. It is the market leader in providing security and cash solutions in many of the countries in which it operates. For more information on G4S please visit www.g4s.com.
GSL
GSL is a leader in the provision of critical primary and support services in the healthcare, education, utilities and government accommodation markets and is a pioneer of outsourced justice services on three continents.
The company works for public sector bodies, local authorities and blue chip companies and employs some 10,000 staff. For more information on GSL please visit www.gslglobal.com.
G4S PLCRelated Shares:
GFS.L