British security group G4S buys Denmark's ISS for Â£5.2 bln
British security group G4S on Monday agreed to buy Denmark-based facilities company ISS for £5.2 billion, creating the world's largest security and facilities firm.
G4S, which runs four prisons and is training security guards for next year's London Olympics, hopes to benefit from massive catering and cleaning operations run by ISS, which is owned by private equity companies EQT and GS Capital.
"G4S plc, the international security solutions group, today announces the acquisition of ISS A/S for an enterprise value of approximately £5.2 billion ($8.2 billion, 5.9 billion euros)," it said in a statement.
G4S is 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 20 percent to 227.6 pence in London deals -- by far the biggest faller on the benchmark FTSE 100 index, which was up 0.50 percent at 5,493.20 points.
"We are excited to announce the acquisition of ISS to create the world's largest integrated security and facilities services group," said chief executive Nick Buckles in the statement.
The new group will employ 1.2 million people across the globe and have combined annual revenues of £16 billion.
"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 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