Shares in global security firm G4S (GFS) shed 5% to 204p in early trade after potential suitor GardaWorld walks away.
Last month, after much market speculation, Canada’s Garda World Security Corp confirmed that it was considering making a cash offer for G4S.
But the plug has now been pulled on any negotiations.
Confirmation came in an announcement made on Sunday which simply said that GardaWorld ‘does not intend to make an offer for the company’. It leaves investors to speculate on the reasons for the decision.
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Unusually, GardaWorld kept its distance while it weighed up an offer for G4S and didn't engage at all with the Board, which would suggest that the emergence of bid chat in the press caught it unprepared.
10-YEAR LOW FOR SHARE PRICE
Before rumours began swirling in April shares in G4S were trading close to 10-year lows following a succession of poorly-received trading updates.
Sales last year were up 1.1% against the company’s medium-term target of 4% to 6% due to weak care and justice revenues in the UK, slow sales in security across mainland Europe and slow trading in its cash-handling business.
Things seemed to have improved in the first quarter with sales up 4.8% thanks to new orders in security and cash-handling activities in the US, which the firm won in the second half of last year, but the shares continued to drift.
The attention of investors is now likely to shift to G4S's strategic review and the potential spin-off of the cash-handling unit. Talk of a separation has previously excited investors and would follow the example of Spain’s Prosegur.
The company says it is ‘making good progress in its plans’ and the separation should occur some time in the second half of this year so there may be light at the end of the tunnel for long-suffering shareholders.
