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.

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

Event-Driven

US company Allied Universal has discussed a "highly conditional indicative offer" of "at least 210 pence" per share, subject to due diligence, with G4S' Board.
<ul>
<li>This could be the opening salvo in a bidding war for G4S.</li>
<li>According to press, G4S had been inviting offers from other industry players in the hope of a white knight arising.</li>
<li>"The board carefully considered this proposal with appropriate advice from the company's financial and legal advisers and rejected it on the basis that the highly conditional offer, at 210p per share, significantly undervalues G4S and its prospects."</li>
<li>G4S said that it was “engaged with Allied and an independent consultant to establish a process through which commercially desensitised information may be provided”.</li>
</ul>
Allied Universal currently enjoys some advantage over GardaWorld, whose 190p hostile bid has been strongly dismissed by G4S.
G4S' shares closed at 214p on 5 November.
Considering the hostile offeror and white knight, it is likely that a familiar bidding war will ensue. I recommend LONG G4S at the current price of 214p. An improved offer could come at around 227p (blended multiple of EV/NTM EBITDA and P/E). That would be a nearly 20% higher than GardaWorld's hostile offer, would reflect G4S' better prospects and would be more palatable to its Board.

US company Allied Universal has discussed a "highly conditional indicative offer" of "at least 210 pence" per share, subject to due diligence, with G4S' Board.

This could be the opening salvo in a bidding war for G4S.
According to press, G4S had been inviting offers from other industry players in the hope of a white knight arising.
"The board carefully considered this proposal with appropriate advice from the company's financial and legal advisers and rejected it on the basis that the highly conditional offer, at 210p per share, significantly undervalues G4S and its prospects."
G4S said that it was “engaged with Allied and an independent consultant to establish a process through which commercially desensitised information may be provided”.

Allied Universal currently enjoys some advantage over GardaWorld, whose 190p hostile bid has been strongly dismissed by G4S.
G4S' shares closed at 214p on 5 November.
Considering the hostile offeror and white knight, it is likely that a familiar bidding war will ensue. I recommend LONG G4S at the current price of 214p. An improved offer could come at around 227p (blended multiple of EV/NTM EBITDA and P/E). That would be a nearly 20% higher than GardaWorld's hostile offer, would reflect G4S' better prospects and would be more palatable to its Board.

G4S PLC

G4S Playing Hard-To-Get