European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

The contest for <a href="https://www.smartkarma.com/entities/g4s-plc" target="_blank" data-smartkarma-citation="entities:21948:1" rel="noopener">G4S PLC (GFS LN)</a> will be settled by an unfrequent head-to-head auction if neither GardaWorld or Allied Universal has sent a revised (read knockout) offer before 5.00pm on Saturday 20 February and prevailed by then.
<ul>
<li>
The procedure provides for up to five days of public bidding over sequential business days, with February 22 set as the first day of the auction.
</li>
</ul>
The Telegraph reported that the City expected GardaWorld to return well above Allied Universal’s offer.
<ul>
<li>G4S is a scarce asset.</li>
<li>It is the world’s largest security company, with £7 bn annual turnover and 530,000 employees worldwide.</li>
<li>G4S is trading at higher multiples than <a href="https://www.smartkarma.com/entities/securitas-ab" target="_blank" data-smartkarma-citation="entities:22476:1" rel="noopener">Securitas AB (SECUB SS)</a>.</li>
</ul>
For either bidder, it would be a transformational deal, with some economies of scale and, above all, long-term contracts and relationships:
<ul>
<li>Allied Universal, California based, has annual revenues of about £6 bn and 250,000 employees.</li>
<li>GardaWorld, backed by BC Partners, has annual revenues of about £2 bn and 100,000 employees.</li>
</ul>
Revised bids could come in the region of 282p, valuing the equity of G4S at c. £4,361 mn. Bids could go even higher.
<ul>
<li>G4S shares are trading at 269p, as investors bet that improved offers are coming.</li>
<li>The gross spread to a 282p hypothetical revised offer is 4.6%.</li>
<li>
HOLD your breath if you've already got the trade on, go LONG if not, although the latter involves both second guessing the bidders and a maximum downside of c. 9% (using 269p vs. Allied's last offer).</li>
</ul>

The contest for G4S PLC (GFS LN) will be settled by an unfrequent head-to-head auction if neither GardaWorld or Allied Universal has sent a revised (read knockout) offer before 5.00pm on Saturday 20 February and prevailed by then.


The procedure provides for up to five days of public bidding over sequential business days, with February 22 set as the first day of the auction.


The Telegraph reported that the City expected GardaWorld to return well above Allied Universal’s offer.

G4S is a scarce asset.
It is the world’s largest security company, with £7 bn annual turnover and 530,000 employees worldwide.
G4S is trading at higher multiples than Securitas AB (SECUB SS).

For either bidder, it would be a transformational deal, with some economies of scale and, above all, long-term contracts and relationships:

Allied Universal, California based, has annual revenues of about £6 bn and 250,000 employees.
GardaWorld, backed by BC Partners, has annual revenues of about £2 bn and 100,000 employees.

Revised bids could come in the region of 282p, valuing the equity of G4S at c. £4,361 mn. Bids could go even higher.

G4S shares are trading at 269p, as investors bet that improved offers are coming.
The gross spread to a 282p hypothetical revised offer is 4.6%.

HOLD your breath if you've already got the trade on, go LONG if not, although the latter involves both second guessing the bidders and a maximum downside of c. 9% (using 269p vs. Allied's last offer).


Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

YTD sideways congestion for the MSCI ACWI ex-US and an intact downtrend for the MSCI EM index continue to point to a risk-off environment for international equity markets, and supports our neutral outlook. We continue to recommend avoiding broad indexed exposure in favor of selectivity. In today’s report we highlight actionable country- and Sector-specific themes within Norway, India, Japan and Australia.

YTD sideways congestion for the MSCI ACWI ex-US and an intact downtrend for the MSCI EM index continue to point to a risk-off environment for international equity markets, and supports our neutral outlook. We continue to recommend avoiding broad indexed exposure in favor of selectivity. In today’s report we highlight actionable country- and Sector-specific themes within Norway, India, Japan and Australia.

Global Ex-U.S. & EM Continue to Point to Risk-Off Environment

Sweden

Securitas AB sells products and services for the protection of homes, work places, and community. The Company's services include specialized guarding and mobile services, monitoring, and consulting and investigations. Securitas operates in Europe, North and South America, the Middle East, and Asia.

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Securitas AB (SECUB SS)

G4S Heading for Takeover Panel Auction

Market bets on improved offers, which could come c. 282p (gross spread 4.6%) or higher. HOLD your breath if you have the position, LONG if not...

Jesus Rodriguez Aguilar

Global Ex-U.S. & EM Continue to Point to Risk-Off Environment

YTD sideways congestion for the MSCI ACWI ex-US and an intact downtrend for the MSCI EM index continue to point to a risk-off environment for...

Vermilion Research

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