G4S shareholders approve £3.8bn takeover by Allied

G4S is set to be taken over by its North American rival Allied Universal, after shareholders agreed to a £3.8bn deal that ends a months-long battle for control of the UK security group.

Allied, backed by private equity firm Warburg Pincus and Canadian pension fund, Caisse de dépôt et placement du Québec, on Tuesday said it had won the backing of 79 per cent of investors for its 245p-a-share offer, which the G4S board agreed to in December.

Once completed, the deal will remove the FTSE 250-listed company from the London stock market and bring to an end one of the most acrimonious takeover battles in recent years. G4S’s Canadian rival GardaWorld started the process when it went public with a hostile bid for the company in September. 

The takeover “provides shareholders with an attractive premium, while securing the future success of G4S for employees, customers, pension scheme members and other stakeholders”, the UK group’s chairman, John Connolly, said in a statement.

Allied last week lowered the threshold for shareholder approval of the deal from 75 per cent to 50 per cent plus one share. Shares of G4S closed up 0.7 per cent at 244.5p.

GardaWorld in effect ended its takeover attempt last month when it said it would not raise its £3.7bn bid for the company, which it said had faced “scandals, crises and lawsuits”. 

Allied is smaller than its London-headquartered rival, with revenues of £6bn versus G4S’s £7.8bn. A takeover will create a global security giant with 750,000 staff in 80 countries and the largest army of private security guards in the world.

The merger will be watched by governments as G4S provides critical state services — including the management of prisons in the UK and South Africa, security for 40 US embassies and the Pentagon as well as uniformed guards at rock concerts, sports events and offices.

G4S is one of the largest UK-listed companies to be taken over by a privately held group in recent years. Its removal from the stock market will mean the British outsourcer is not subject to the public scrutiny required of listed companies.

In recent years, G4s has faced a series of scandals: in 2019 the government stripped G4S of work managing Birmingham prison seven years early, after inspectors found the jail “exceptionally violent”.

California-based Allied has been on an acquisition spree, buying 70 businesses over the past nine years as it seeks to build scale in the fragmented global security market, which is growing as a result of terror and crime fears and government cuts to police budgets. 

However, Allied has also said it will look at selling G4S’s care and justice unit, which runs prisons and detention centres in the UK, South Africa and Australia. It has also mooted sales of G4S divisions in Iraq, Afghanistan, Sudan and Uganda. 

Ashley Almanza, G4S chief executive since 2013, has been offered a short-term £2m contract to stay on in the event of an Allied takeover, which could also give him a share payout of up to £15m.

US state officials and global trade unions have called for greater scrutiny of the private equity takeover amid concerns that it could harm working conditions for hundreds of thousands of low-wage security guards worldwide.