Shareholder rebellion sees G4S drop plans to acquire rival ISS

G4S said it scrapped the move – announced just two weeks ago – after shareholders raised concerns over the scale of the takeover amid the uncertain economic climate. Chief executive Nick Buckles said he was disappointed but “on the basis of feedback received” the company had decided not to proceed.

The deal would have created a huge cleaning and security conglomerate with 1.2 million staff and made the firm the world’s second largest employer.

The collapse of the deal came ahead of a shareholder vote today where G4S needed 75 per cent to be cast in favour for the deal to proceed.

Some 13 per cent of shareholders reportedly intended to vote against the deal with a number of others set to abstain.

G4S said it had incurred £50m of costs so far related to financing, although it will not pay a break fee to ISS for ending the deal.

It had planned partly to finance the deal through a £2bn rights issue, one of the largest share issues seen this year in London – but which will not now go ahead.

The firm, which runs four prisons and is training security guards to work at the London Olympics, said it will continue to focus on its security business and will also “continue to acquire businesses which add capability to G4S to help drive the business for- ward”.

G4S, formerly known as Group 4 Securicor, provides services ranging from cash transportation to running prisons.

In Yorkshire its operations include running HMP Wolds near Brough in East Yorkshire, and providing security services for the region’s Crown and Magistrates’ courts.

Chairman Alf Duch-Pedersen said: “We believe that developing our business towards an enhanced security and integrated facilities services model is the way forward and we saw ISS as an excellent opportunity to achieve this aim.”

ISS is owned by private equity companies EQT and GS Capital and boasts high-profile contracts with Citigroup as well as the Foreign and Commonwealth Off- ice.

Louise Cooper, markets analyst at BGC Partners, said: “G4S’s shareholders have not approved the massive and deeply discounted rights issue to fund the acquisition of ISS that management wanted to make.

“Given an uncertain and difficult world where many fund managers are not making returns for their clients, it may be no surprise that they are cautious with their money and unwilling to fund grand expansion plans that would have been nodded through in the good times.”