Security firm G4S to sell struggling U.S. Government arm
LONDON (Reuters) - G4S (GFS.L), the world's biggest security firm, said it would sell its high-level U.S. government business by the end of the year after budget cuts and delays hit revenues in the division.
The sale is expected to complete within six months, it said on Tuesday, explaining that as a non-U.S. firm it had less access to important commercial data, which compounded the high-level security restrictions which made it harder to manage and grow the business.
The unit, which runs sensitive contracts such as fire protection and mine clearance services for U.S. government departments like Energy and Homeland Security, as well as international organizations like NATO, had annual revenues of around 400 million pounds ($602.84 million) in 2012.
The sale is being handled by investment bank Houlihan Lokey.
The United States has represented a tricky market for outsourcing firms including G4S and British rival Serco (SRP.L), as the country's budget delays and defense cuts have severely hampered work prospects and hit margins. G4S' U.S. government arm saw revenues fall 14 percent in the six months to June 30.
G4S, which is in over 125 countries, said it would retain its U.S. commercial business, which provides security and technology to firms like Google (GOOG.O) and GE (GE.N), and government departments where high level security clearances are not needed.
G4S said the revenues of this business, combined with the firm's other ongoing U.S. operations totaled around 1.2 billion pounds in 2012.
The firm will announce its full-year results on March. 13.
($1 = 0.6635 British pounds)
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