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Charterhouse Said to Mull $1.6 Billion Offer for G4S Unit

Charterhouse Capital Partners LLP, a London-based private-equity firm, is considering a 1 billion-pound ($1.6 billion) offer for G4S Plc (GFS)’s cash-solutions business, according to three people familiar with the matter.

Charterhouse approached banks and its investors over financing a deal for the unit, said the people, who asked not to be identified because the talks are private. G4S, the world’s largest security-services provider, is aware of the proposal and discussed the sale option internally, said one of the people.

G4S, based in Crawley, England, hasn’t entered formal discussions with Charterhouse or mandated an external adviser for the unit, which provides transportation of cash using high-security vehicles and manages ATM machines, the person said. G4S may decide against a sale of the unit, one of the people said.

G4S in August agreed to sell its cash-solutions unit in Canada and a data business in Colombia as new Chief Executive Officer Ashley Almanza tries to reduce debt and revamp the company following a series of blows to its reputation. G4S replaced former CEO Nick Buckles in May after it failed to provide enough guards for last year’s London Olympics. The Serious Fraud Office this year started probing the company for allegedly overcharging the government for the electronic tagging of prisoners.

Investor Pressure

Other private-equity firms have also shown interest in G4S’s cash-solutions business, said one of the people. Piers Zangana, a spokesman for G4S, said the company doesn’t comment on speculation. Gary Sunderland, a spokesman for Charterhouse, declined to comment. G4S said in August it’s considering further disposals.

Cevian Capital AB, a Stockholm-based hedge fund and shareholder in G4S, has pressed the company to sell units including the cash solutions business, the Sunday Times reported Sept. 29, without saying how it got the information. Cevian’s representatives couldn’t immediately be reached for comment outside regular business hours.

Charterhouse, formed in a management buyout from HSBC Holdings Plc 12 years ago, manages a 4 billion-euro ($5.4 billion) private-equity fund. Its portfolio includes companies such as catering company Elior, clothing and footwear retailer Vivarte and insurance company Acromas.

G4S’s cash solutions business made a profit before interest, tax and amortization of 135 million pounds on revenue of 1.29 billion pounds in 2012, according to G4S’s website. The business accounted for 24 percent of total profit.

G4S shares have dropped 20 percent in London trading in the last six months, valuing the company at 3.8 billion pounds, while the British FTSE 100 index gained 5.3 percent.

Government Orders

The U.K. government, accounting for 10 percent of G4S’s sales last year, has said it may exclude the company from tendering for future tagging contracts.

Justice Secretary Chris Grayling said July 11 the company overcharged for the electronic tagging of offenders, including billing for dead people. The Serious Fraud Office said it is examining the tagging allegations, dealing another blow to the company after the bungled 2012 London Olympic Games contract.

In July, U.K. prosecutors also said they were reconsidering whether to charge former employees of G4S after a jury in London ruled that a man in their custody was unlawfully killed while being deported to Angola. In October, a U.K. parliamentary panel said G4S was providing “squalid” and “run-down” housing to asylum seekers under government contracts.

Former CEO Buckles told lawmakers last year that G4S’s reputation was “in tatters” and that he agreed the bungled Olympics contract was a “humiliating shambles.”

G4S’s profit before interest, taxes and amortization was little changed in the first half at 201 million pounds. Sales climbed 7.2 percent and G4S flagged a contract pipeline worth 4 billion pounds a year. It generated 218 million pounds in cash from operations.

To contact the reporters on this story: Kiel Porter in London at kporter17@bloomberg.net; Aaron Kirchfeld in London at akirchfeld@bloomberg.net; Jeffrey McCracken in New York at jmccracken3@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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