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Advisers line up for £300m fees bonanza as hostile bidder for G4S makes a firm offer

Christopher Williams
·2-min read
G4S - Darren Staples /REUTERS
G4S - Darren Staples /REUTERS

Bankers, lawyers, accountants and public relations advisers are in line for fees of more than £300m if GardaWorld succeeds in its hostile bid for G4S.

The Canadian bidder, backed by the London private equity firm BC Partners, issued its formal offer to G4S shareholders yesterday, revealing the potential bonanza for advisers.

Six banks are due to share up to £180m for arranging financing for the £3bn bid. Of those, Barclays, UBS, Bank of America and Jefferies are due to split up to £100m more in advisory and broking fees.

Lawyers led by the Wall Street firm Simpson Thacher & Bartlett are in line for up to £18m, accountants up to £4m and public relations advisers up to £7m.

The disclosure that GardaWorld will pay as much as 10pc of the proposed valuation for G4S in fees came alongside a firm offer of 190 pence per share that gives shareholders until Nov 7 to decide whether to accept.

The price is unchanged from when GardaWorld revealed its approach at the end of September, which G4S rejected as too low.

Stephan Crétier, the executive chairman of GardaWorld, which competes with G4S in the security market, took the opportunity to mount a renewed attack on its management.

In a letter to shareholders issued alongside the offer, he accused G4S of “baseless optimism” about its business, which instead needs “a deep root and branch reprogramming”.

He said: “Simply said, a cookie-cutter approach will not succeed in fixing G4S’s operations.”

Mr Crétier criticised G4S claims that it has exited “lower margin” businesses, citing figures he suggested showed declining margins.

A G4S source described the analysis as “completely disingenuous” as it compared full year figures with the most recent half year, ignoring seasonality.

GardaWorld also argued that after dividends, pension and one-offs, G4S does not make any money. Exceptional and restructuring charges have totalled £1.6bn since 2013, it said.

Mr Crétier said: “These items have, unfortunately for shareholders, been a recurring theme for many years, and we believe will continue to be.”

The offer left open the possibility that GardaWorld could increase its bid, although it said a move is not being contemplated.

G4S shares nevertheless closed on Friday at nearly 209 pence, valuing the FTSE 250 company at more than £3.2bn and signalling investors expect a price bump.

Last week Schroders, which owns a tenth of G4S, publicly rejected the bid but said: “We are open to a deal at a fair price that more accurately reflects peer multiples, synergies and other strategic benefits that an acquirer will gain from.”

A G4S spokesman said: “There is nothing new here. [The offer] significantly undervalues the company and its prospects and is not in the best interests of shareholders or other stakeholders.”