70.1 F
Laguna Hills
Saturday, Jul 2, 2022

Allied Takes Interest In Huge UK Firm

- Advertisement -

Allied Universal, already the biggest private security firm in North America, is considering acquiring a United Kingdom-based firm in a deal that could make the Santa Ana company one of the world’s largest employers.

On Oct. 9, G4S plc, a London-based security services company with 533,000 employees, disclosed that it has received “interest” from Allied.

“The Board of G4S plc confirms it has received an expression of interest from Allied Universal Security Services LLC regarding a possible offer for the entire issued and to be issued share capital of the Company,” G4S said in a statement last week.

“There can be no certainty that an offer will be made for the company by Allied Universal, nor as to the terms on which any such offer might be made,” added G4S, whose shares are traded on the London Stock Exchange.

An Allied Universal spokeswoman declined to comment for this article.

If the acquisition does occur, Allied would have a total of 773,000 employees. That would make Allied the world’s sixth largest employer, just trailing Amazon’s 798,800 employees, according to Fortune magazine’s annual ranking of employers.

Walmart is the world’s largest employer with 2.2 million workers, according to Fortune’s data.

The acquisition would more than double Allied’s annual revenue to around $18 billion and greatly expand its presence throughout Asia and Africa.

Hostile Bid

The G4S statement put Allied Universal in the middle of a hostile takeover battle.

Garda World Security Corp., a Quebec-based private security firm with 102,000 employees, has been talking with G4S since June about a buyout and offered nearly $3.9 billion for the company in the middle of September.

G4S rejected the bid, calling it undervalued. Garda World started its hostile bid on Sept. 30.

“G4S is a huge worldwide business that is very badly run,” Garda World said in an Oct. 6 letter to G4S shareholders, citing as examples unfunded pension liabilities and a suspended dividend.

Garda World even accused the British company of aiding the enemy, saying it “faces a lawsuit from U.S. personnel injured or killed in Afghanistan or their families alleging that the G4S group provided support to the Taliban in Afghanistan.”

After Allied’s “interest” became known on Oct. 9, the shares of G4S rose another 6%.

G4S’s shares at press time last week were valued at about $4.2 billion, an indication that investors believe a higher price beyond the initial $3.9 billion offer is possible.

Major G4S shareholders have so far been unconvinced by Garda World’s cash offer, seeing the bid as too low, Bloomberg News reported earlier this month.

G4S has been approaching potential counterbidders to solicit rival proposals to fend off Garda World’s hostile bid, Bloomberg said, citing unidentified people with knowledge of the matter. The company may also draw interest from private equity firms, which could potentially allow management to stay in place under a new owner, Bloomberg said.

Since Garda World made its offer, G4S shares are up 51%. It’s roughly $4.2 billion market cap is about half of Allied’s $8.5 billion estimated valuation.

1901 Founding

G4S, which can trace its origins to Copenhagen in 1901, was officially formed in 2004 when two security firms from the UK and Denmark merged. It now operates in 90 countries across six continents, running everything from train security in the Netherlands to mine clearing in Africa.

G4S calls itself “the world’s leading global, integrated security company.”

G4S in 2019 reported about $10.1 billion in revenue, a 2.6% increase from 2018.

Allied currently has about $8.5 billion in annual sales and about 240,000 employees.

Allied Universal Chief Executive Steve Jones joined the company in 1996 when it had only $12 million in annual revenue.

Through a series of acquisitions and organic growth, he’s built it into the nation’s largest private security firm. In 2016, he doubled the company’s revenue to $4.5 billion by acquiring AlliedBurton Security Services. It’s made numerous other acquisitions since then.

Jones strategy is for an acquired company to adapt Allied’s systems, branding and culture. Jones said he’s an admirer of how Waste Management rolled up independent trash companies in the 1980s.

He also emphasizes guards using the latest technology to their advantage, such as employing robots and monitoring social media websites for potential protests or riots near their customers.

Jones was honored by the Business Journal as an executive of the year in 2019 for his company’s growth. A panel of independent judges in September also awarded him a Business Journal Excellence in Entrepreneurship award.

One of Allied’s strengths has been to retain employees in an industry noted for high turnover. Jones told the Business Journal that by retaining employees, he can reduce turnover and thus not have to spend as much on training expenses for new hires.

G4S could probably use that philosophy. Its latest annual report says about 200,000 of its 533,000 employees turn over annually.

Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.

Featured Articles


Related Articles