Acquisition of ISS Not To Proceed
G4S plc (“G4S”) announces that G4S and FS Invest II S.àr.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.
G4S +44 (0)1293 554400
Deutsche Bank +44 (0)20 7545 8000
Greenhill +44 (0)20 7198 7400
RBS Hoare Govett +44 (0)20 7678 8000
Tulchan Group +44 (0)20 7353 4200
Deutsche Bank AG is authorised under German Banking Law (competent authority: BaFin – Federal Financial Supervisory Authority) and authorised and subject to limited regulation by the Financial Services Authority.
Details about the extent of Deutsche Bank AG's authorisation and regulation by the Financial Services Authority are available on request.
Deutsche Bank AG, London Branch is acting exclusively for G4S in connection with the transaction referred to in this announcement and no one else in connection with the transaction and will not be responsible to anyone other than G4S for providing the protections afforded to clients of Deutsche Bank AG, London Branch, nor for providing advice in relation to the transaction or any matter or arrangement referred to in this announcement.
Greenhill & Co. International LLP, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for G4S in connection with the transaction referred to in this announcement and for no one else in connection with the transaction and will not be responsible to anyone other than G4S for providing the protections afforded to clients of Greenhill & Co. International LLP nor for giving advice in relation to the transaction or any matter or arrangement referred to in this announcement.
The Royal Bank of Scotland plc (trading as RBS Hoare Govett), which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for G4S in connection with the transaction referred to in this announcement and for no one else in connection with the transaction and will not be responsible to anyone other than G4S for providing the protections afforded to clients of The Royal Bank of Scotland plc (trading as RBS Hoare Govett) nor for giving advice in relation to the transaction or any matter or arrangement referred to in this announcement.
This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities of G4S (the "Securities").
The Securities have not been and will not be registered under the US Securities Act of 1933 (the "Securities Act"), or with any securities regulatory authority of any State or other jurisdiction of the United States.
Consequently, the Securities may not be offered, sold, resold, transferred, delivered or distributed, directly or indirectly, into or within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any State or other jurisdiction of the United States. No public offering of the Securities is being made in the United States.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
This announcement, including information included or incorporated by reference in this announcement, may contain "forward-looking statements" concerning G4S. Generally, the words "will", "may", "should", "continue", "believes", "expects", "intends", "anticipates" or similar expressions identify forward-looking statements. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those suggested by them.
Many of these risks and uncertainties relate to factors that are beyond G4S's ability to control or estimate precisely, such as future market conditions and the behaviours of other market participants, and therefore undue reliance should not be placed on such statements which speak only as at the date of this announcement.
Forward-looking statements contained in this announcement apply only as at the date of this announcement.
G4S undertakes no obligation publicly to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. Nothing in this announcement is intended, or is to be construed, as a profit forecast.
Past performance is no guide to future performance and persons needing advice should consult an independent financial adviser.