British firm G4S secures Â£5.2-bn takeover of Denmark's ISS
British security group G4S, which runs four prisons and is training guards for next year's London Olympics, has agreed to buy Danish firm ISS in a £5.2-billion takeover that will create a world leader.
G4S announced in an official statement that it will pay the equivalent of $8.2 billion or 5.9 billion euros to purchase outsourcing provider ISS from its private-equity owners EQT and GS Capital.
The new combined group will become the world's biggest security and facilities firm by revenue, profit, countries of operation and number of employees.
G4S hopes to benefit from the lucrative catering and cleaning operations run by ISS, which is based in Copenhagen.
"This acquisition brings together two high quality companies and management teams with a very strong business performance and integration track record," added G4S chairman Alf Duch-Pedersen.
"We have a compelling strategy, significant experience in meeting a wide range of customer needs and in motivating a large and diverse workforce to deliver excellent service to our customers."
ISS chief executive Jeff Gravenhorst has agreed to join the G4S board as part of the deal.
The new group will employ 1.2 million people across the globe and have combined annual revenues of £16 billion.
G4S is meanwhile looking to raise £2.0 billion to help fund the takeover by selling new shares, while the deal also takes into account the groups' debt levels.
Traders said news of a rights issue sent shares in G4S crashing 22.1 percent to close at 219.90 pence -- by far the biggest faller on London's benchmark FTSE 100 index, which finished 0.54 percent lower at 5,436.70 points.
"Since G4S was created in 2004, we have grown our business significantly and have expanded our service offering beyond our traditional security heritage into much broader areas of facilities services and outsourcing to meet growing customer needs," added G4S chief executive Nick Buckles.
"We believe this acquisition will transform our business, significantly accelerate the delivery of our solutions strategy and create substantial value for shareholders."
G4S and ISS added that the tie-up would lead to an estimated £100 million of annual pre-tax cost savings by 2014.
Kevin Lapwood, an analyst at Seymour Pierce stockbrokers, said: "Although G4S has in the past proved effective at integrating large acquisitions, this will double the size of the group and there is bound to be some transactional risks in the short term."
The two companies overlap in 40 countries, where there will be significant opportunities to make cost savings.
The deal will also allow G4S, which already operates in 125 countries, to expand in markets such as Spain, Italy and Switzerland, where ISS has a strong presence.
About £1.5 billion, split evenly between cash and G4S shares, will be paid to the owners of ISS.
© 2011 AFP