Group 4's Danes to swoop on Securicor
THE controversial Danish security and prisoner-escort firm Group 4 Falck is in advanced talks to acquire its smaller British rival Securicor. The merged group would create a global firm with sales approaching £4.5 billion and a market value of more than £1.6 billion.
Nick Buckles, chief executive of Securicor, has been in negotiations with Lars Norby Johansen, his counterpart at Group 4, for the past eight weeks. The two sides are hoping to thrash out an agreed deal and it is likely a stock-exchange announcement confirming the talks will be made tomorrow.
Securicors non-executives, including its chairman Lord Sharman and Lord Condon, a former commissioner of the Metropolitan Police, are being kept informed.
Securicor is capitalised at £600m and has sales of £1.5 billion, but a bid premium could increase this price by at least £100m. In the past three years the group has had a turbulent ride on the stock market and its prospects were hit when its American subsidiary Argenbright Security was sued. This division was responsible for security screening for two of the flights involved in the September 11 terrorist attacks
Buckles has since reassured the City that Securicor has more than £1 billion of insurance cover in place. It is thought that as part of the deal with Group 4, this exposure has been ring-fenced.
However, Securicor has also had difficulties with its German operation and this has hit the groups financial performance. In recent weeks Securicors share price has started to recover and analysts at Citigroup have put a target on the shares of 120p. This compares with Fridays closing price of 112p.
For some time Buckles has told investors he has been looking for a transformational deal. To help achieve this he has sold non-core subsidiaries, such as the remaining 50% stake in its parcel-delivery business to Deutsche Post for £167m. As a result, the company returned £75m to shareholders. Last week Buckles ducked out of further controversy when he ended the groups contract to guard Huntingdon Life Sciences, the animal-testing business.
Group 4, based in Copenhagen, is the worlds second-largest security firm with operations in 85 countries. But it has had mixed success in Britain. Group 4 became a household name when it set up a prisoner-escort service 11 years ago and became a laughing stock after seven prisoners escaped in the first three weeks.
If Securicor is bought, another British security company will have been taken over by a foreign group. Last year United Technologies bought Chubb. Securicor was founded almost 80 years ago by Edward Shortt, a former Liberal cabinet minister. It started with four bicycle-riding guards in old police uniforms.
The groups activities now include transporting prisoners and cash. Like Group 4, it has spotted big opportunities in the business of running prisons and the electronic tagging of prisoners. Securicor already owns and runs Parc prison at Bridgend, Wales, and analysts say there are some 15 foreign governments looking at the British system of electronic tagging.
A Securicor spokeswoman refused to comment on the talks, but it is thought Buckles has secured a board post in the enlarged group.
- Group 4 employs 230,000 people worldwide
- It operates in 85 countries
- Annual sales of the Copenhagen-based group are worth £2.9 billion
- Its biggest shareholder is Jorgen-Philip Sorensen, the founder, who owns
a 22% stake. Sorensen was sent to Britain by his father in the 1960s to
extend the family security empire. He set up Group 4 in Worcestershire
- In 2000 it merged with Falck
- Securicor employs 100,000 people, of whom 20,000 work in Britain
- It operates in 50 countries
- Sales are worth £1.3 billion
- The company handles £1.2 billion of cash every day, collecting it
from shops, delivering to companies to pay wages, and supplying banks to
stock cash machines
- On average a Securicor guard somewhere in the world is attacked every