G4S AND FS INVEST AGREE NOT TO PROCEED WITH
ACQUISITION OF ISS AND RELATED RIGHTS ISSUE
G4S plc ("G4S") announces that G4S and FS Invest II S.Ã r.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. Â 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.
