GardaWorld, the Canadian security firm that has launched a £3bn hostile bid for rival G4S, has begun a charm offensive by holding meetings with top shareholders in its FTSE 250 target in a bid to woo them.
The company said it was meeting with institutional investors such as Schroders and US-based Harris Associates and Sachem Head Capital, which between them control a quarter of G4S shares.
G4S has repeatedly dismissed GardaWorld’s 190p-a-share offer, labelling it “opportunistic” because of the fall in the share price caused by the pandemic, and adding that it “materially undervalues G4S and its prospects”.
The offer, at a 30pc premium, has helped drive G4S shares to 201p.
However, GardaWorld chief executive Stephan Crétier has said he will “educate” investors on how troubled G4S really is.
On Tuesday as the meetings began, GardaWorld issued a document listingthe issues it saw with its target, and denying its bid was opportunistic, saying the share price was depressed by G4S’s “own mis-steps” even before coronavirus struck.
These include the decision to sell G4S’s cash handling business at what it called a “knock-down” price in February, contributing to what GardaWorld claimed was £1bn of value destruction - equivalent to cutting the share price by 62p.
GardaWorld, which is majority-owned by private equity firm BC Partners, also claimed G4S faced several “potentially crippling unresolved lawsuits” worth £1.6bn.
These include claims from investors about potential loses relating to G4S charging the UK taxpayer to electronically tag prisoners - some of whom turned out to be dead or back in jail, and a US lawsuit alleging G4S supported the Taliban in Afghanistan.
GardaWorld also said it was winning business from G4S because its target was “badly run” - something it claims to know from employing former staff.
Further criticism came about rising pension liabilities, and failure to reinstate the dividend despite the pandemic having a “net positive impact on the security industry”.
Mr Crétier added: “We have said before that the business needs a new owner, not a face-saving change of management or a shake-up of the board. That will not produce the root and branch change to the company’s operating practices that is so urgently needed.
“Only after such a profound operational programme – which will take years, not months – will customers, and the public at large, begin to trust this business to deliver.”
G4S rejected the claims, saying that it was “simply incorrect” that management had mismanaged the business or sold the cash handling too cheaply, adding that it was “insensitive and inappropriate to discuss Covid-19 as a net positive” for the sector.
Upcoming legal cases were “not new news”, G4S said, adding it communicated these to investors and accusing Gardaworld of scaremongering.
Claims that it was losing business to GardaWorld were also wrong, G4S said, adding that it was growing organically while the bidder was expanding through a “debt-fueled acquisition spree”.
Pension worries were also brushed aside, with G4S saying it agreed funding plan to deal with the deficit.