European Event-Driven Analyst

Jesus Rodriguez Aguilar

Jesús is an Insight Provider (Event-driven) on the Smartkarma network, where he looks across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations. He has served as Economic and Business Advisor at the Spanish Congress in Madrid. Prior to that, he has worked in the City of London: as a Credit Analyst at Bloomberg; Event-driven associate at former boutique European Research; and doubled as Special Situations and Equity-linked VP (convertible bonds) at Merrill Lynch. Jesús has an MBA from the London Business School, a BA (Hons.) degree in Economics from the Complutense University in Madrid, and a BA (Hons.) in Law from U.N.E.D., also in Madrid.

Gubel/Prosegur: Partial Takeover Offer at Interesting Spread

G4S Deploys Its Defences and GardaWorld Increases Its (Final?) Offer

Event-Driven

G4S has accepted and recommended the offer of £3.8 bn launched by the US firm Allied Universal, although the Canadian firm GardaWorld does not rule out rewarming the bid.
Allied Universal's bid is 245p. The takeover bid accepted by G4S represents a premium of 68% compared to its last price compared to the first offer in September.
<ul>
<li>245p is a fair offer according to my valuation.</li>
<li>This represents: 0.77x EV/Forward Revenue, 8.97x EV/Forward EBITDA and 17.07x Price/Forward EPS.</li>
<li>The Board has played well its strategy to extract a higher value from interested bidders.</li>
<li>This offer is c. 4% higher than the enhanced ("raised and final") offer from GardaWorld, issued on 2 December. After GardaWorld's bids, 9 December ('Day 53' after the initial public bid) was the last day for any competing offers.</li>
<li>Within 24 hours, Garda made a formal announcement to the market to say its latest 235p offer was not final (it reserved itself the right to increase its "raised and final" offer in case of any competing bid).</li>
</ul>
Garda strongly wants to acquire G4S, which is a unique asset. That said, the combination of lowball bids and aggressive behaviour towards G4S has not earned him any sympathies among G4S's Board and management.
G4S closed at 255p on 10 December, 4% higher than Allied's recommended offer. The market expects a final offer from GardaWorld.
<ul>
<li>The small margin between the two bids makes another increase likely.</li>
<li>If Garda raises its offer, it would be the fourth time since June it has done so.</li>
</ul>
The bidding war has prompted a remarkable recovery in the share price, which was 70p in April. It has gained 365% in eight months.
HOLD for an improved offer by Garda, which could come at around 260p (6% higher than Allied's). That level, although higher than my valuation of 245p, does not seem too value destructive. In any case, it gets nearer winner's curse, and a further bid from Garda could be answered by a raised offer by Allied.
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Read-across: G4S is the latest UK company trading cheaply to fall into overseas rivals, with William Hill and RSA Insurance having been snapped up in the last months.
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G4S has accepted and recommended the offer of £3.8 bn launched by the US firm Allied Universal, although the Canadian firm GardaWorld does not rule out rewarming the bid.
Allied Universal's bid is 245p. The takeover bid accepted by G4S represents a premium of 68% compared to its last price compared to the first offer in September.

245p is a fair offer according to my valuation.
This represents: 0.77x EV/Forward Revenue, 8.97x EV/Forward EBITDA and 17.07x Price/Forward EPS.
The Board has played well its strategy to extract a higher value from interested bidders.
This offer is c. 4% higher than the enhanced ("raised and final") offer from GardaWorld, issued on 2 December. After GardaWorld's bids, 9 December ('Day 53' after the initial public bid) was the last day for any competing offers.
Within 24 hours, Garda made a formal announcement to the market to say its latest 235p offer was not final (it reserved itself the right to increase its "raised and final" offer in case of any competing bid).

Garda strongly wants to acquire G4S, which is a unique asset. That said, the combination of lowball bids and aggressive behaviour towards G4S has not earned him any sympathies among G4S's Board and management.
G4S closed at 255p on 10 December, 4% higher than Allied's recommended offer. The market expects a final offer from GardaWorld.

The small margin between the two bids makes another increase likely.
If Garda raises its offer, it would be the fourth time since June it has done so.

The bidding war has prompted a remarkable recovery in the share price, which was 70p in April. It has gained 365% in eight months.
HOLD for an improved offer by Garda, which could come at around 260p (6% higher than Allied's). That level, although higher than my valuation of 245p, does not seem too value destructive. In any case, it gets nearer winner's curse, and a further bid from Garda could be answered by a raised offer by Allied.


Read-across: G4S is the latest UK company trading cheaply to fall into overseas rivals, with William Hill and RSA Insurance having been snapped up in the last months.



G4S PLC

Allied Universal's Agreed Offer