European Event-Driven Analyst

Jesus Rodriguez Aguilar

Jesús is an Insight Provider (Event-driven) on the Smartkarma network, where he looks across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations. He has served as Economic and Business Advisor at the Spanish Congress in Madrid. Prior to that, he has worked in the City of London: as a Credit Analyst at Bloomberg; Event-driven associate at former boutique European Research; and doubled as Special Situations and Equity-linked VP (convertible bonds) at Merrill Lynch. Jesús has an MBA from the London Business School, a BA (Hons.) degree in Economics from the Complutense University in Madrid, and a BA (Hons.) in Law from U.N.E.D., also in Madrid.

Event-Driven

GardaWorld has tabled a real offer, at last, by increasing the consideration offered 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>.<ul>
<li>Increased and final cash offer of 235p per G4S Share, valuing the equity of G4S at £3.68 bn. <ul>
<li>23.6% above its initial offer and 12% above Allied's indicative offer.</li>
<li>0.75x EV/NTM revenue, 8.7x EV/Forward EBITDA, 16.4x P/Forward EPS (Capital IQ consensus).</li>
<li>Assumes net debt of £1.6 bn</li>
</ul>
</li>
<li>
Acceptance conditionreduced from 90% to 50% plus one G4S Share.</li>
<li>Agreement with the G4S UK Pension Trustee on a £770 mn support package comprising cash and other measures.</li>
<li>European Union, United States and Canada antitrust clearances in respect of the offer have been obtained.</li>
<li>Acceptances deadline: 1.00 p.m. (London time) on 16 December 2020.</li>
<li>
The final offer may not be so final, as per GardaWorld: "The financial terms of the final offer are final and will not be increased, save that Fleming reserves the right to revise the financial terms of the final offer where: (i) there is an announcement of a firm intention to make an offer for G4S by any third party; or (ii) the Panel otherwise provides its consent."</li>
<li>The raised offer may not still be to G4S's liking: "GardaWorld looks forward to discussing the Final Offer with G4S shareholders".</li>
</ul><div>
<div>
In my Insight about Allied's interest, I mentioned that an improved offer could come at around 227p (blended multiple of EV/NTM EBITDA and P/E).
<ul><li>The improved offer has come 3.5% higher.</li></ul>
</div>
<div>Putting G4S on the median EV/NTM EBITDA (Capital IQ consensus), 8.89x vs. 8.92x for Securitas, the implied equity value would be 245p, the level at which G4S is trading.</div>
</div><div>I do not discard an improved offer by Allied (and Garda reserves the right to raise its bid should a better offer arrives). G4S is a market leader and a unique asset. Recommendation is HOLD.</div>

GardaWorld has tabled a real offer, at last, by increasing the consideration offered for G4S PLC (GFS LN).
Increased and final cash offer of 235p per G4S Share, valuing the equity of G4S at £3.68 bn. 
23.6% above its initial offer and 12% above Allied's indicative offer.
0.75x EV/NTM revenue, 8.7x EV/Forward EBITDA, 16.4x P/Forward EPS (Capital IQ consensus).
Assumes net debt of £1.6 bn



Acceptance conditionreduced from 90% to 50% plus one G4S Share.
Agreement with the G4S UK Pension Trustee on a £770 mn support package comprising cash and other measures.
European Union, United States and Canada antitrust clearances in respect of the offer have been obtained.
Acceptances deadline: 1.00 p.m. (London time) on 16 December 2020.

The final offer may not be so final, as per GardaWorld: "The financial terms of the final offer are final and will not be increased, save that Fleming reserves the right to revise the financial terms of the final offer where: (i) there is an announcement of a firm intention to make an offer for G4S by any third party; or (ii) the Panel otherwise provides its consent."
The raised offer may not still be to G4S's liking: "GardaWorld looks forward to discussing the Final Offer with G4S shareholders".


In my Insight about Allied's interest, I mentioned that an improved offer could come at around 227p (blended multiple of EV/NTM EBITDA and P/E).
The improved offer has come 3.5% higher.

Putting G4S on the median EV/NTM EBITDA (Capital IQ consensus), 8.89x vs. 8.92x for Securitas, the implied equity value would be 245p, the level at which G4S is trading.
I do not discard an improved offer by Allied (and Garda reserves the right to raise its bid should a better offer arrives). G4S is a market leader and a unique asset. Recommendation is HOLD.

G4S Deploys Its Defences and GardaWorld Increases Its (Final?) Offer