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As a fierce critic of boards that simply roll over the minute a suitor arrives waving a few pound notes, it has been reassuring to see the vim with which G4S has stood firm in the face of a bruising hostile takeover bid from Canada’s GardaWorld.
Far too many great British companies have been flogged off at the first opportunity, without so much as a whimper from those entrusted by shareholders to protect their interests. I’m looking at you Inmarsat, Merlin Entertainments and Cobham.
The G4S directors, led by chief Ashley Almanza, have fought admirably to ensure that does not happen on their watch, with a strong rejection of a low-ball 190p offer from its private equity-backed rival.
Yet, the G4S board is in danger of overplaying its hand with the rejection of a counter-bid from US rival Allied Universal. The basis of the company’s defence is simple enough: its problems are old news; we have a bright future, so back our attempts to remain independent.
There is some evidence to support that. The G4S name has become synonymous with scandal, but high-profile ones like the Olympics security fiasco that occurred under the previous regime.
True, it has been slow going at times and has come at a vast cost, but Almanza’s argument that the company has turned a corner is not just the usual empty language of a takeover battle.
The upgraded forecasts provided in a 60-page defence document last week helped to put some meat on the bones, just in case investors were sceptical after watching the share price largely go sideways for the past seven years under Almanza.
But only some. And ultimately, that’s where G4S’s fight for independence could come unstuck. GardaWorld’s 190p-a-share bid was easy to defend because it was too low. It was lower than the share price before the Covid-19 pandemic and it has been below the current share price for weeks. As Almanza correctly pointed out: “The market has spoken.”
At 210p-a-share, an approach from Allied Universal can’t be rejected with the same confidence because all investors will do is look at their screens and see that G4S’s share price was hovering between 203p and 207p last Wednesday.
In fact, given that the last time the shares traded above that in any meaningful way was two years ago, they may have liked the opportunity to decide for themselves.
Yet, the board has issued another firm rebuttal on the basis that it is “highly conditional”, without saying what those conditions are and that it “significantly undervalues” G4S.
And that is how this battle will be decided, regardless of who ends up being the highest bidder.
Of course no one wants to see a big British company in charge of some critical public sector contracts end up in private equity hands. Few firms emerge from venture capitalist ownership better for the experience. The AA, Saga and Debenhams will surely attest to that.
But shareholders will also question G4S’s prospects if the status quo remains, and many will conclude its future is, at best, uncertain, despite some belated yet underwhelming evidence to the contrary.
On balance, management may just about be given the benefit of the doubt, but both sides can afford to bid higher and, having settled at 211p at the end of trading, investors have signalled that G4S is there for the taking. The next approach will be virtually impossible to ignore.
Support for the airlines? Kind of
Finally some government help for the embattled airline industry. Have ministers at last got the message about providing targeted help for those sectors most affected by the pandemic?
Don’t be silly. The Treasury’s response to a request for support from easyJet and others has remained the same: there will be none for specific industries, but help yourself to furlough, Covid-19 loans and other state packages.
Failing that, shareholders should step in. It’s a stance that is at odds with European neighbours, where there have been bailouts for Lufthansa, Air France and Alitalia.
Yet at a time when every major UK carrier is fighting for survival, a battle made harder by confusion over quarantine rules and the absence of any airport testing regimes, more than £1m of taxpayer cash has been granted to a start-up airline that isn’t even airborne yet.
Flypop, which has no planes or even an operating licence, was handed the money from the aptly-named Government’s Future Fund. No wonder ministers are so philosophically averse to picking winners if this is how bad they are at it.
Fast-food chains end the beef
RIP the “Burger Wars” when America’s fast-food giants used to tear strips out of each other with clever advertising campaigns. Burger King is urging people to save jobs by eating at McDonald’s and other rivals. What a way to end the beef.