Allied Universal won a months-long takeover battle for Britain's G4S, the world's largest private security firm, on Monday after going head-to-head in an auction with Canadian rival GardaWorld.
Shares in G4S, which had gained 80 per cent since GardaWorld made its offer public in September, were down nearly 10 per cent to 242.6 pence after Britain's Takeover Panel said the auction had concluded with Allied's final bid of 245 pence per share, compared with Gardaworld's 235 pence.
The management of G4S had already agreed to the offer from Allied, which valued the company at 3.8 billion pounds ($5.3 billion), but its shareholders had held off approving numerous extensions of both offers in the hope of a better deal.
Allied's acquisition creates an even larger private security firm with more than 750,000 people employed worldwide as the U.S. firm expands outside of North America.
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GardaWorld said ahead of the result that it would bid no higher in the auction, which represented a relatively rare conclusion to a British takeover battle.
In 2018, Comcast beat Rupert Murdoch's Twenty-First Century Fox in a bespoke-style auction for pay-television group Sky that lasted only a day.
Analysts have said Allied should have more cost synergies given its greater overlap with G4S in the United States. G4S, which reported a loss in its last fiscal year, said it had 1.56 billion pounds in net debt as of mid-2020.
In an offer document last year, Allied said it planned to evaluate the possibility of exiting the prison business and certain markets such as Iraq, Afghanistan, Sudan and Uganda.
G4S' dealings in Qatar and the United Arab Emirates have come under scrutiny, with Norway's wealth fund saying it would no longer invest in it due to "unacceptable risk".
"We are disciplined buyers and we will not overpay for a company with systemic ESG issues that continue to come to light," GardaWorld boss Stephan Cretier said in a statement.
The British firm said: "G4S is committed to the highest ESG practices and refutes any suggestion to the contrary." Allied declined to comment.
In its 2019 annual report, G4S said it would implement a due diligence programme starting with Europe and the Middle East to ensure a supplier code of conduct promoting health and safety, respecting human rights and business ethics.
G4S has faced problems in Britain, where the government took over the running of a major prison from it after riots.