G4S, 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 yesterday that the £1.55-billion bid from British private equity group Charterhouse Capital Partners 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 yesterday when it denied an allegation that its employees had abused inmates at a prison it ran in South Africa.
For the group, which employees 620,000 people in 120 countries, cash handling is an important part of it growth strategy.
The company 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 armoured trucks, accounted for about 18 per cent of G4S’s £7.3 billion 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 amortisation, compared to the 2013 valuation of 12.1 times for the whole group.
Shareholder Threadneedle Investments, which owns a 1.3 per cent stake in G4S, said it supported the rejection, describing the offer as low for a strategically important and strongly performing part of the company.