Advisers to Canada’s GardaWorld, the safety group pursuing a £3bn deal to purchase UK rival G4S, stand to make as much as £312m in charges if they’re profitable in clinching shareholder assist for the hostile takeover.
The charges had been specified by a proposal doc launched by GardaWorld on Saturday, during which the Canadian group argued that its 190p per share supply for G4S was justified given the extent of funding wanted to handle longstanding monetary and reputational points.
Bankers together with Barclays, UBS, Financial institution of America and Jefferies stand to earn as a lot as £100m in charges for offering monetary recommendation and broking companies ought to a deal be reached, GardaWorld mentioned within the doc. An additional £180m can be paid to banks that present the financing preparations used to pay for the deal.
One senior London banker not concerned within the transaction mentioned that the monetary advisory charges had been unusually excessive, highlighting a collection of comparable non-public equity-backed transactions within the UK market the place banks earned far much less.
For authorized work, legal professionals on the deal led by Simpson Thacher might make as much as £18m, whereas public relations advisers together with London’s Montfort Communications stand to earn as a lot as £7m.
The profitable charges at stake underscore the significance of the transaction to advisers within the London market, the place mergers and acquisitions exercise has been sluggish this 12 months.
The supply caps weeks of bitter accusations from the smaller Canadian firm, during which the non-public fairness agency BC Companions owns a 51 per cent stake.
Within the doc, GardaWorld accused the UK firm of getting “baseless optimism” about its prospects and pledged to make sweeping “cultural change” if it takes management.
“Merely mentioned, a cookie-cutter strategy won’t reach fixing G4S’s operations,” mentioned Stephan Cretier, chief government of GardaWorld. “This operation wants a deep root-and-branch reprogramming.”
G4S, best-known for working prisons and offering safety guards, is combating to maintain traders on its aspect after having rejected the 190p bid from GardaWorld final month.
Its largest investor Schroders has acknowledged that it’s open to a takeover at a better worth. The newest paperwork are a proper supply, however don’t stop GardaWorld from rising its bid ought to it select to take action.
G4S mentioned: “There’s nothing new right here. The phrases of the supply stay unchanged from these contained in GardaWorld’s announcement on 30 September, which the board unanimously rejected on the idea that it considerably undervalues the corporate and its prospects and isn’t in the most effective pursuits of shareholders or different stakeholders.”
G4S has annual revenues of greater than £7bn and employs greater than 500,000 folks in 80 nations, however it has been harm by a collection of scandals together with the lack of a UK authorities contract to run Birmingham jail final 12 months.
GardaWorld is a a lot smaller operation, with about £2bn of annual revenues and 100,000 workers, however it argues that G4S has been dropping market share.
It believes 190p is the correct worth due to G4S’s £300m pension deficit and due to potential future liabilities from authorized actions taken in opposition to the corporate, it mentioned.
G4S mentioned final week that it had acquired curiosity from a rival acquirer, Allied Common, one of many largest operators within the US, the world’s greatest safety market. It has but to obtain a proper supply and Allied has declined to remark.
Extra reporting by Kaye Wiggins