Sussex security group makes huge purchase

G4S the security group, has recently announced a takeover deal which is valued at over £5 billion. The security group is currently known for transferring cash in secure vehicles as well as running prisons. The deal sees the company purchase the Denmark-based ISS in a deal that is going to create a combined workforce of over 1 million people.

G4S is based in Sussex and currently 80% of its turnover comes from security work. After the deal it is expected that this percentage will fall to just over 40%. The rest of the revenues will come from services which include catering, cleaning and portering. ISS is a company that was launched over 100 years ago and has important contracts with the Foreign Office as well as large institutions such as Citigroup.

The company is also responsible for cleaning around 2 1/2 million hotel rooms each year and it also provides a great deal of catering in schools. ISS is currently owned by EQT and GS capital, two private equity firms. For the deal, G4S has raised £2 billion from shareholders and is expected to take on an additional $2.5 billion in debt.

G4S has commented that the addition of ISS to its company will lead to significant cost savings and also change the direction of the group. Currently the security firm is providing the security guards for the London Olympics and is heavily involved with the court system in England. After the deal the combined revenues of the group are estimated to be over £15 billion, which is more than double the current revenue of G4S.

G4S is currently one of the largest employers in the world and is the largest private employer in the UK. Currently it employs over 1 million people. Reaction from investors to this deal has not been good however, and share prices have fallen 20%.

An analyst from Seymour Pierce, Kevin Lapwood, has commented, “G4S has a history of large acquisitions, but this will double the size of the group there are bound to be some transactional issues, especially in the short term.” Nick Buckles is the Chief Executive of the group and he has said, “We have an exceptional track record and we are going to make this deal work, it is something that will change the market and is of such a scale that this kind of opportunity only comes along every few years.”