Scandal-hit G4S turns down $2.5bn offer for its cash transport unit
G4S, the world's biggest security services firm that is fighting to restore its reputation after a series of scandals, has rejected a $2.5bn (€1.75bn) offer for its cash transportation business.
G4S said yesterday that the bid from British private equity group Charterhouse Capital Partners was "highly opportunistic" and undervalued the unit.
The offer comes as the group tries to salvage its relationship with the British government, one of its biggest clients, after a series of blunders, including its failure to supply enough security guards for the 2012 London Olympics.
G4S, which has 620,000 employees in 120 countries providing security services ranging from managing prisons and immigration centres to guarding players at Wimbledon, said cash-handling was an important part of its growth strategy.
The unit, which distributes notes and coins for banks and shops using high-security vans, accounted for 18pc of the group's £7.3bn turnover last year.
"We think G4S was right to reject the bid, on both valuation and strategic grounds," JP Morgan analysts said.
The analysts said the offer, after taking into account the company's debt, valued the unit at 7.1 times enterprise value to earnings before interest, tax and amortisation, compared with the 2013 valuation of 12.1 times for the whole group.
Britain's government put its G4S contracts under review in July after it discovered that it and rival Serco had charged for tagging criminals who were dead or in prison. Last week, the chief executive of G4S's UK and Ireland business resigned.
Panmure Gordon analyst Mike Allen said cash-handling was a stable business that had not produced to its full potential in recent years because of low interest rates.
"G4S needs a business like that while they're trying to find their feet when there's so much uncertainty with the UK government," he said.
CEO Ashley Almanza, who was promoted from finance chief in June, is expected to unveil a plan for how the company will cut debt and focus on emerging markets next month.
Shares in G4S, which fell to a four-year low after its British government contracts were put under review in July, were trading up 1pc in London. (Reuters)