I am happy with the way matters are moving here.

cheers always like info - hope you have a good one too

Has UK security giant G4S lost the plot?



Graham Ruddick, 21:46, Saturday 22 October 2011

When City analysts and leading institutions gathered in May to hear from Nick Buckles, little did they know that plans to radically reshape G4S (Other OTC: GFSZF.PK - news) were already under way.

Buckles was in credit with the City. The chief executive had just delivered a sixth consecutive year of revenue, profit and dividend growth. Since the merger of Securicor and Group 4 Falck in 2004, the security group had been one of the FTSE's star performers.

At the helm since 2005, Buckles explained to his audience at the company's annual capital markets day how it was dealing with government spending cuts and how G4S would approach acquisitions.

After a quiet period following the recession, the 50-year-old said, the highly acquistive G4S was ready to spend more than 200m a year on targets.

A slide in the presentation showed that when expanding into new geographical markets, G4S was focused on four areas manned guarding, cash services, monitoring and facilities management.

Summarising the position, Buckles said: "In terms of strategy, we are still very much focused on being a secure solutions group on outsourcing of strategic security and risk processes."

Those present did not appear to have considered his comments on facilities management deals particularly important. Nor were there any questions on whether G4S was interested in buying ISS, the giant European cleaning and facilities management firm put up for sale by its private equity owners after a failed float at the start of the year.

After all, G4S ran prisons, guarded cash and will provide security for the 2012 Olympics so why would it buy a cleaning and catering company? But just five months on that is exactly what the company has done.

Last Monday, Buckles announced G4S had agreed to buy ISS for 5.2bn from the private equity arm of Sweden's Wallenberg family and GS Capital Partners, the private equity unit of Goldman Sachs (NYSE: GS - news) .

A total of 1.5bn would be paid to the owners in cash and shares, leaving them with a 11.3pc stake in G4S. The deal is to be financed by a deeply-discounted 2bn rights issue and a new 3.7bn debt facility.

The City was shocked. Although the biggest 12 shareholders in G4S had apparently been told of the deal on the previous Thursday and Friday, shares in the company slumped 22pc by the end of the day.

"The acquisition of ISS represents a shift away from G4S's core strategy formulated two-and-a-half years ago," analysts at Collins Stewart (Other OTC: COLLF.PK - news) said, adding it destroys shareholder value.

G4S shareholders soon went public with their own concerns. Parvus, a London-based hedge fund, said the deal was "dangerous", while a second top 20 shareholder called it "absurd" and "totally unnecessary".

Investors who have enjoyed years of growth through G4S's success in security were being asked to bet substantial sums on sectors where the company has no substantial track record. And they were uncomfortable with it.

For the deal to succeed, G4S needs 75pc of voting shareholders to support the deal at a meeting on November (Stuttgart: A0Z24E - news) 2, and advisers close to ISS and G4S are, in private, seriously concerned it could fall apart.

Friday's news that keys capable of opening every door at Birmingham Prison which G4S has run since October 1 had been lost topped off a bad week for the company.

But this weekend, Buckles has had far more on his mind, as he held further talks with shareholders to try to convince them of the merits of the deal.

Having flown to the US last Wednesday for talks with US investors, he will tomorrow travel to Copenhagen to meet Scandinavian shareholders inherited from the Group 4 merger. A number of leading UK investors are also understood to have demanded face-to-face meetings with him.

One top 20 UK shareholder told The Sunday Telegraph there was "genuine hurt" among investors that they had been approached about the deal only at the tail-end of the process. "We are the owners of the business, not the investment banks," said the investor. "They trusted the investment bankers more than the shareholders and that is stupid."

The shareholder said the vote feels "reasonably close" at the moment and the US shareholders will "find this difficult" to accept because of the size of the rights issue.

He added: "I think it will be a bloody hard uphill struggle from here."

Buckles will be hoping the second week of talks progresses more successfully than the first, as echoes of Prudential (LSE: PRU.L - news) 's failed $35.5bn (22.2bn) bid last year for AIA which faltered due to poor communication and faltering shareholder support became all the more apparent.

Buckles' problem is convincing investors that rather than an opportunistic strategic U-turn, ISS is fundamental to G4S succeeding in the markets of the future. Critics of the deal do not understand why ISS is worth increasing G4S's leverage to more than three times earnings before interest, tax, depreciation and amortisation (Ebitda), increasing its exposure to Western Europe (Chicago Options: ^REURUSD - news) and reducing security revenues from 82pc of the business to 42pc.

"ISS is more of an opportunistic purchase that runs slightly counter to our expectation of the group's prior strategic ambition," said David Brockton at Espirito Santo.

Edoardo Mercadante, the founder of Parvus, added: "I have never been exposed to a company with a trebling of the share count."

He claims the 100m of annual pre-tax savings by 2014 are "peanuts" given the size of the deal and the numbers only stack up because G4S will be able to lower ISS's tax rate from 32pc to below 26pc.

Then there is the challenge of integrating 1.2m staff across more than 100 countries, an unprecedented feat, even before taking into account that ISS has made 600 acquisitions of its own over the past decade. Buckles accepts this is the "highest risk" in the acquisition. However, for him, ISS is worth it.

Last Monday's announcement was the culmination of work that began in February for G4S. The board commissioned consultants Bain to conduct a review of the company and its markets which was presented to it in May.

Although the findings remain private, they are thought to say the future of support services will revolve around offering integrated contracts to customers, becoming a one-stop-shop for everything from cleaning to security.

With ISS in play after its $2.4bn float was pulled in January, talks between the two sides began firmly in June. A source close to the deal said: "This is a multi-year acceleration of the strategy. In two or three years this transaction will look completely obvious."

The source also dismissed criticism that the deal could hinder G4S's drive into emerging markets. They claim Buckles has reiterated his target of securing 50pc of revenues from emerging markets by 2015 and that the deal will bring "revenue synergies". Nonetheless, this was not a deal that shareholders had pushed for, nor expected.

G4S's advisers claim leading investors apart from Parvus have shown "every sign" of being supportive.

But with Buckles' neck firmly on the line, the next seven days will be crucial if he is to gain enough momentum for what he called this "market changing" deal to come to fruition

The big question haunting the G4S mega-deal

Kamal Ahmed, 21:46, Saturday 22 October 2011

If you owned a Rolls-Royce, what would it take to persuade you to put some go-faster stripes down the side and an extra engine in the boot? That must be the question many investors in G4S are asking themselves.

G4S is planning to sell off large swathes of ISS in France if its controversial 5.2bn deal for the cleaning and catering group is approved by shareholders.

G4S says held supportive meetings with shareholder
15:30, Sunday 23 October 2011

LONDON (Reuters) said it had received positive feedback from shareholders over its proposed 5.2 billion pounds bid for ISS and Chief Executive Nick Buckles expressed surprise over the fall in the company's share price.

"We have had some good supportive meetings and are working hard to talk with investors about the rationale and significant benefits and our belief in this transaction," a G4S spokesman told Reuters on Sunday.

Shares in G4S lost over 20 percent of their value on Monday after it said it would buy the Danish support services company -- partly due to the dilutive impact of a proposed 2 billion pounds rights issue to help fund the deal.

In an interview with the Sunday Times, G4S's Chief Executive Nick Buckles said the share price reaction had been a shock.

"I knew the size and scale of the deal would surprise the market but we thought it would be received really positively," he said.

Since the offer was announced, G4S, which is the world's biggest security company, has faced a backlash from some shareholders who have objected to the strategy and financing behind the deal.

Aside from balking at the size of the rights issue, the biggest equity fundraising in Britain since a 3.4 billions pound cash call by Standard Chartered (Xetra: 859123 - news) last November (Stuttgart: A0Z24E - news) , some shareholders have raised concerns over G4S moving away from its security services roots into areas such as cleaning and catering.

Buckles told the Sunday Times he had "pre-briefed" key shareholders the week before the deal was announced and still believes he has their approval.

"I just think people felt they had to take a view very quickly on Monday, but this is one to digest slowly. It's early days. We still have investors to see," he said.

The Sunday Times also reported that Institutional Shareholder Services, a governance body that advises 1,700 large investors, had recommended shareholders vote against the deal at a general meeting on November 2.

The shareholder body said the deal was a departure from G4S's strategy to focus on small deals in emerging markets and raised concerns about integrating the two big companies and the level of debt that G4S would be left with.

G4S told Reuters on Sunday it had not held meetings with Institutional Shareholder Services and therefore had not been able to brief them on strategy.

"They have not met the company, they have not heard their strategy and there are factual inaccuracies in the report," the G4S spokesman said, adding that the company had previously said it would look at large and transformational deals.

Investors told to block G4S Danish deal


James Hurley, 20:26, Sunday 23 October 2011

A major investors' advisory group is the latest dissenting voice to join growing shareholder opposition to G4S (Other OTC: GFSZF.PK - news) 's planned 5.2bn takeover of Danish cleaning and catering company ISS.

US-based Institutional Shareholder Services, which advises 1,700 large investors, has voiced concerns that the deal would represent a departure from the security giant's strategy of focusing on small tactical deals in emerging markets, as previously set out by G4S chief executive Nick Buckles. The governance body also highlighted the risks of integrating 1.1m staff across 100 countries and the debt burden the deal would put on G4S's balance sheet

good stuff dc - i am told one of the main concerns is the fact t/o means that gfs will strategically be concentrating on the west rather than rest of the world - this has investors concerned with current econ. climate - investor also annoyed they will be taking on debt and moving to non core areas - i personally looking forward to tomorrow here as will be very interesting imo - gl

G4S investors still concerned over 5.2bn Iss deal


Danish investors in security group G4S (Other OTC: GFSZF.PK - news) remain concerned about its proposed 5.2bn acquisition of ISS despite the security firm's chief executive Nick Buckles flying out for crunch talks.

Mr Buckles gave a presentation to investors and analysts on Monday about the controversial deal, which is being funded by a 2bn rights issue and new 3.7bn debt facility.

BankInvest, which owns roughly 0.25pc of G4S, said it has already cast its proxy vote against the deal, while Carnegie Asset Management and Nykredit Asset Management are also opposing the proposal, according to reports in Denmark. Carnegie has said the strategy behind the deal is "hard to understand".

Danish investors hold more than 10pc in G4S, which was created by the merger of Securicor and Scandinavian Group 4 Falck in 2004. G4S needs 75pc of voting shareholders to support the deal in a meeting next week but the deal is in doubt because of concerns G4S will struggle to integrate ISS and will be left with a cumbersome debt pile.

Analysts at Scandinavian bank Enskilda said on Tuesday they were "sceptical" about the impact ISS will have on G4S's margins.

A spokesman for G4S said the company has held "constructive" meetings with shareholders.

G4S plc UK DK
Statement re agreement not to proceed with acqu...





1 November 2011

G4S AND FS INVEST AGREE NOT TO PROCEED WITH
ACQUISITION OF ISS AND RELATED RIGHTS ISSUE

G4S plc ("G4S") announces that G4S and FS Invest II S..l. ("FS Invest") have
agreed to terminate the share purchase agreement ("SPA") pursuant to which G4S
was to acquire ISS A/S ("ISS") from FS Invest (the "Acquisition"). Accordingly,
the board of directors of G4S (the "Board") will not put any resolutions to the
shareholder meeting convened for 2 November 2011 and will not be proceeding with
the rights issue or other financing required for the Acquisition.

Alf Duch-Pedersen, Chairman of G4S, said:

"We believe that developing our business towards an enhanced security and
integrated facilities services model is the way forward in the longer term and
we saw ISS as an excellent opportunity to achieve this aim. However, following
the announcement of the Acquisition, shareholders have raised concerns
particularly over its scale and perceived complexity against the backdrop of
current macro-economic uncertainty.

We consulted our leading shareholders ahead of announcing the transaction, and
based on the feedback received, felt confident to launch the deal. We have now
discussed the merits of this combination with a significantly larger number of
our shareholders and whilst they continue to express their overwhelming support
for the standalone G4S business and its management, the Board has listened
carefully to concerns raised by shareholders regarding the Acquisition and has
concluded that in the circumstances it is inappropriate to proceed.

G4S is a successful and well managed business. It has delivered year on year
earnings and dividend growth since the group was created in 2004 from the merger
of Securicor and Group 4 Falck. G4S has consistently generated returns on
invested capital well above its cost of capital, and delivered average
shareholder returns of 13.3% per year since the start of 2005.

The Board and management of G4S remain focused on continuing to generate
sustainable shareholder value and driving business success both organically and
through targeted acquisitions."

Nick Buckles, Chief Executive of G4S, said:

"We are obviously disappointed that we have not been able to complete this
transaction. We felt strongly that the combination of G4S and ISS would create
a market-leading integrated security and facilities services company which would
be well placed to meet the growing needs of customers and deliver significant
investment returns at the same time.

However, we respect the importance of shareholders' views and, on the basis of
feedback received since the transaction was announced, we have decided not to
proceed.

Our strategy will continue to focus on providing higher value, integrated
security solutions to our customers and leveraging our expertise in key sectors,
geographies and service lines. We will continue to acquire businesses which add
capability to G4S to help drive the business forward.

The G4S business continues to develop positively with organic growth of 5% in
the first nine months of 2011."

The Acquisition, together with the rights issue, was conditional, inter alia, on
securing 75% shareholder support at a G4S shareholder meeting. There are no
break fees payable pursuant to the termination of the SPA. The majority of the
fees and costs to be paid in connection with the Acquisition and the rights
issue was only payable if the Acquisition completed. However certain of these
fees and costs, amounting to approximately 50 million, will be incurred by G4S
in any event. These fees relate principally to commitment fees in connection
with the financing of the Acquisition, but also include the net costs of
derivative hedging instruments entered into to hedge the foreign exchange risk
associated with raising funds in sterling to effect a purchase in Danish Krone
and up to 2 million payable to ISS's auditors in relation to certain work
carried out in respect of the Acquisition. These fees and costs will be treated
as exceptional items in the G4S accounts for the year ended 31 December 2011.

Board of directors has just cost shareholders 50m should they be fired?

Graham Ruddick, 18:16, Tuesday 1 November 2011

Nick Buckles knew his "market-changing" 5.2bn takeover of ISS was in trouble on the same day the deal was announced.

The G4S chief executive revealed the proposed acquisition on the morning of Monday, October 17. Buckles thought he had the backing of his leading shareholders after "positive" feedback from pre-marketing. Several institutions had even agreed to sub-underwrite the 2bn rights issue that would finance the deal, he was told.

However, when G4S (Other OTC: GFSZF.PK - news) shares slumped by 22pc it was clear all was not well. Advisers to the company claimed it was simply a technical repricing to reflect the deeply discounted rights issue. In reality, the City was in shock. "It became an uphill struggle from there," Buckles said on Tuesday.

For many investors, the security group had been a safe haven stock that had outperformed the market even during the recession. However, spending 5.2bn on a cleaning and catering group with 2bn of new shareholder money and 3.7bn of debt would create a radically different company.

Not only would G4S no longer be focused on security, but it would become one of the most highly leveraged companies in the FTSE 100 (Euronext: VFTSE.NX - news) . That was not the G4S (Dusseldorf: GHN.DU - news) that investors bought into.

During pre-marketing on the previous Thursday and Friday, Buckles tried to convince his 12 largest investors that G4S needed to do the deal because its customers increasingly wanted a wider range of services from its contractors.

However, these "briefings" lasted less than an hour and some were held over the phone. The shareholders say they were simply given a preview of an announcement that was ready to be made, and did not have enough time to digest the acquisition. Although many would need time to establish their opposition to the deal, they were already frustrated, surprised and uncomfortable at the way it had been presented.

One top 20 shareholder said: "It's like buying a flat for your girlfriend and then asking whether she likes it. Even though she will be paying for it."

Another said: "We are the owners of the business, not the investment banks. They trusted the investment bankers more than the shareholders and that is stupid."

The drop in the share price revealed the concerns but also spooked the institutions who had been willing to support it. Opposition became widespread. As well as the surprise strategic shift amid economic uncertainty, investors had doubts about the price being paid to the private equity owners of ISS and whether G4S could integrate a business that would have 1.2m employees around the world.

Privately and publicly, Kames Capital is the only leading shareholder to have confirmed it would have supported the deal. By the time G4S cancelled the shareholder vote on the deal on Tuesday, it was facing a landslide defeat.

"We clearly regret that we misread the market's appetite for deals of this scale," Buckles sad.

A top five City shareholder in G4S says Buckles should have approached it earlier about the deal and it would have agreed to not trade shares in the company. The investor would have urged Buckles to "revisit" the proposals before they were even made public, potentially saving G4S the embarrassment of the deal unravelling in front of the City. "It is not impossible that they could buy bits of ISS. Some bits of the business are very good. But the size and totality of it [the deal] was the problem," they added.

Buckles claims he was advised that approaching the shareholders just days before the announcement was "best practice". Meanwhile, the advisers to G4S Deutsche Bank, Greenhill (Xetra: A0B9GF - news) and RBS (LSE: RBS.L - news) are frustrated that institutions backtracked from their positive feedback during pre-marketing. A G4S source claims "several institutions" handed over letters saying they would sub-underwrite the rights issue. "There is something to learn for everyone from this," the source said.

Those lessons add to the ones garnered from the failed Prudential (LSE: PRU.L - news) and AIA deal last year. G4S investors have again demonstrated that management and shareholders must engage properly, particularly if the investors are being asked to stump up fresh cash.

However, it is doubtful that Buckles could ever have persuaded shareholders against their view that the ISS deal was an unproven strategic shift that asked too much of them. His strong track record at G4S was no match for the scepticism of shareholders, which was exacerbated by volatile global stock markets. The one consolation for Buckles is that his prior track record is likely to ensure he keeps his job.

ahhhh - buckles made a bit of a hash of it all!! apparently today he said he considered his job was safe - the other funny thing in this debacle was that iss actually ended up voting against iss i.e. itself LOL! still opportunity to make some good splosh greatly received thanks bucky - and this news obviously will not do gfs any harm

G4S ticked up 3.6 to 266.4p as Credit Suiss upgraded the stock to "outperform" with a 310p price target. "We expect organic growth will accelerate to 9pc in 2012," said Credit Suisse.

..London 2012 Olympics: G4S interviewing 84,000 candidates

By Graham Ruddick | Telegraph – 2 hours 2 minutes ago


......
G4S (Other OTC: GFSZF.PK - news) says it is interviewing 84,000 candidates for its Olympic security contract.

The FTSE 100 security group is looking to hire around 10,000 temporary workers, with 2,500 already in place, to provide security at the Olympic Park in London during the Games this week.

The contract is worth around £200m to G4S, which will need to vet and train all the workers before London 2012.

Nick Buckles, chief executive, said: "This is a very large undertaking. It's a tough challenge but we have a strong management team in place."

The Olympic contract will boost organic revenue growth for G4S by 2pc to 3pc this year. In a trading update yesterday, Mr Buckles said G4S had grown revenues by 6.7pc in the first quarter of 2012 aided by the Olympics and 11pc growth in developing markets.

However, despite the revenue growth, profits for G4S will only be at "similar levels" to 2011. This is because margins have shrank due to spending cuts in the US and as G4S has won new UK contracts, such as providing security for Royal Bank of Scotland (LSE: RBS.L - news) branches, with higher initial costs.

Mr Buckles said he was "pleased" with the company's increase in revenues and said margins should improve in the second half of the year.

He added: "Based on recent contract awards, outsourcing trends and the group's bid pipeline, the organic growth rate is expected to continue to improve during 2012."

Shares in G4S rose 9.2 to 276p.

..

A bit of a no brainer if you were quick this morning.

260 would be nice!

And there it is! :-)

Statement regarding the Olympic Games Security Contract

I might let this run a bit longer.

G4S Olympics staff failed to arrive for security work

Only 17 of an expected 56 G4S staff turned up for work at an Olympic team hotel in Salford, the chairman of the Greater Manchester Police Authority has said.

As a result, the force has pulled in front-line officers to provide security, Paul Murphy revealed.

Home Secretary Theresa May will answer questions about G4S problems later.

Parliament Live

Little hope if Connelly new chairman does not stand by Buttons.
After all Connelly's old firm Deloittes did a review of the contract and gave advice. One assumes Connelly knew this before taking up appointment.

Buttons needs support at a time like this and Connelly should offer positive help and talk it up. Perhaps Agius could help here! If Buttons has to go then Connelly must too.