G4S in £5.2bn merger

Posted: 17th October 2011 09:10

Security firm G4S has announced a £5.2 billion deal which it says will create the 'world's largest integrated security and facilities services group'. The company announced the acquisition of ISS A/S for an enterprise value of around £5.2 billion. G4S also announced a 7 for 6 rights issue at 122p to raise approximately £2 billion. The group put forward the following rationale for the deal saying it would: Create a global leader in integrated security and facilities services combining G4S's 2010 revenue of £7,397 million and ISS's 2010 revenue of £8,522 million, accelerate delivery of G4S's strategy to provide integrated facilities services ("IFS"), provide significant growth opportunities and an estimated £100 million of annual pre-tax cost savings by 2014. Lead to an investment of £20 million per year by 2014 in creating service excellence centres to share best practice across the enlarged group, be a financially compelling transaction expected to deliver, within three years:  double digit post-tax ROIC, double digit EPS accretion, no PBITA margin dilution.

It will be funded in a manner to allow G4S to retain a BBB (or equivalent) credit rating. It added that: 'The combination of G4S and ISS creates the world's largest integrated security and facilities services company, by revenue, profit, countries of operation and number of employees.' G4S's chief executive officer, Nick Buckles, said: 'We are excited to announce the acquisition of ISS to create the world's largest integrated security and facilities services group. Since G4S was created in 2004, we have grown our business significantly and have expanded our service offering beyond our traditional security heritage into much broader areas of facilities services and outsourcing to meet growing customer needs. We believe this acquisition will transform our business, significantly accelerate the delivery of our solutions strategy and create substantial value for shareholders.' 'G4S and ISS have very similar cultures and strategic ambitions as well as a strong, shared vision for providing service excellence to customers across the security and facilities services spectrum. The acquisition will also provide significant opportunities for staff at all levels to develop and broaden their skills into complementary areas, as part of a team of more than 1 million G4S employees."

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