As a result of opposition from its shareholders, security group G4S last week ended a AUD$8 billion (£5.2 billion) takeover of ISS. Following shareholder consultation, G4S determined that a takeover of the Danish-headquartered facility services’ provider was inappropriate.
Apparently some major shareholders expressed concerns about the takeover strategy and size of a rights issue required to fund the deal.
The G4S takeover of ISS would have given the combined group revenues of AUD$24.7 billion (£16 billion).
“In July our owner – FS Invest – was approached by G4S proposing to combine our two companies. There was a strong industrial and commercial rationale in the proposal and therefore we pursued the opportunity.”
“However, it became evident after the announcement of the potential combination that G4S shareholders would not support the acquisition, due to the size and perceived complexity of the deal against the current macroeconomic backdrop. As a consequence, our owner has agreed with G4S that the proposed acquisition should not proceed and we should get back to running our separate businesses and pursuing our respective goals,” commented ISS chairman Ole Andersen.
ISS’ group CEO Jeff Gravenhorst observed that, “the combination of ISS and G4S would have been a real game changer in the global service industry. The proposed transaction and the approach from G4S have endorsed our track-record and our customer driven multiservice strategy.
“The last few weeks we have received much recognition of our people, our strong business performance, our emerging market footprint and our leadership in integrated facility services. These are some of our greatest assets, and they are the foundation upon which we will continue to build our future – The ISS Way.”
FS Invest spokesperson Johan Hahnel stated that his company, as ISS’s owner, would remain committed to the company and its management, and fully support the operational strategy which has created proven and sustainable growth over the past six years.
“ISS will continue operating as a strong independent service provider and will maintain and defend its position as the global leader in integrated facility services. This summer – before the approach from G4S – ISS successfully amended and extended its debt facilities, enabling ISS to continue growing its business organically on a ‘business as usual’ basis for several years to come.”
ISS recently released a trading update for Q3 and the first nine months of 2011. Organic growth for Q3 was 7.0% – marking the eighth consecutive quarter with an increasing organic growth rate. Organic growth for the first nine months of 2011 was 6.4%. Growth has been particularly strong in emerging markets, where ISS has more than half of its 530,000 employees.
Since the buy-out in 2005, ISS has roughly doubled its revenue, profit, number of employees and exposure to emerging markets. In the same period, ISS has increased the number of significant international integrated facility services’ contracts from two to 11.
Over the last 12 months ISS has won significant new contracts such as United Kingdom Foreign Commonwealth Office, Statoil, Shanghai Pudong International Airport, New South Wales Government Schools, Tesco, and Phillip Morris International.