G4S backs $5.1 billion Allied deal after bid battle

(Reuters) - Security group G4S on Tuesday agreed to be bought out by Allied Universal for 3.8 billion pounds ($5.1 billion), picking the U.S. company over Canadian rival GardaWorld and potentially ending a tense, months-long bidding war.

FILE PHOTO: Flags fly outside HMP Birmingham after the British government took over its running from G4S, in Birmingham, Britain August 20, 2018. REUTERS/Darren Staples

Allied’s offer of 245 pence per share for London-listed G4S is 10 pence higher than GardaWorld’s sweetened bid from last week, which pegged the British company at 3.7 billion pounds.

G4S, one of the world’s largest private security companies, had last month turned down what it termed a “highly conditional” offer from Allied Universal of 210 pence per share, while also repeatedly rejecting advances from GardaWorld.

“The G4S Board is confident in the long-term prospects of the business and believes this (agreed) offer represents an excellent opportunity to create a leading global security company,” G4S chairman John Connolly said in a statement.

G4S later formally confirmed that it had rejected the GardaWorld bid of 235 pence per share, saying it undervalued the company.

The British company has restructured its business following a series of setbacks, and the bidding war between the U.S. and Canadian companies for G4S began when GardaWorld made its offers for G4S public on Sept. 14.

Since then, G4S shares had gained about 75% in value at Tuesday’s closing price of 255.8 pence, before the deal was announced.

G4S said it considers the terms of Allied Universal’s latest offer to be fair and reasonable and that it intended to unanimously recommend that shareholders accept it.

GardaWorld, which had another week left until its cut-off of Dec. 16 for shareholders to accept its offer, declined to comment on its further plans.

It had labelled its bid last week as a final offer but reserved the right to increase it if a rival made a firm offer.

Financial and legal advisers to G4S on the deal included Citi, J.P. Morgan Cazenove, Goldman Sachs, Lazard and Linklaters, while Allied Universal was advised by Morgan Stanley, Credit Suisse, Moelis & Company, Cleary Gottlieb Steen & Hamilton, Freshfields Bruckhaus Deringer and Kirkland & Ellis.

($1 = 0.7503 pounds)

Reporting by Pushkala Aripaka and Tanishaa Nadkar in Bengaluru, Keith Weir in London; Editing by Shounak Dasgupta, Devika Syamnath, Alex Richardson and Tom Brown