Embattled G4S rejects $2.5-billion offer for cash delivery unit

Mon Oct 28, 2013 11:10am EDT
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By Brenda Goh

LONDON (Reuters) - G4S (GFS.L: Quote), the world's largest security services firm which is fighting to restore its reputation after a series of contract scandals, has rejected a $2.5-billion offer for its cash transport business.

G4S said on Monday that the 1.55-billion pound bid from British private equity group Charterhouse Capital Partners CHCAP.UL was "highly opportunistic" and undervalued the unit, a move which garnered support among analysts and shareholders.

Swooping on a firm whose share price has been sapped by controversy, Charterhouse made the offer as G4S tries to salvage its relationship with the British government, a major client, after a series of blunders, including its failure to supply enough security guards for the 2012 London Olympics.

G4S faced new unwelcome publicity on Monday when it denied an allegation that its employees had abused inmates at a prison it ran in South Africa.

The group, which employees 620,000 people in 120 countries, cash handling was an important part of the growth strategy for a company whose services range from managing jails to protecting sports stars, such as tennis players at Wimbledon.

The cash unit, which distributes notes and coins for banks and shops using armored trucks, accounted for about 18 percent of G4S's 7.3-billion pound turnover last year.

"We think G4S was right to reject the bid, on both valuation and strategic grounds," JP Morgan analysts said.

The analysts said the offer, after taking into account the company's debt, valued the unit at 7.1 times enterprise value to earnings before interest, tax and amortization, compared to the 2013 valuation of 12.1 times for the whole group.   Continued...

A G4S security van is parked outside a bank in Loughborough, central England, August 28, 2013. REUTERS/Darren Staples