US state officials and unions are calling for further consideration of a possible private equity takeover of UK security group G4S, amid fears it could hurt working conditions for hundreds of thousands of low-paid security guards around the world.
Two bidders backed by private equity argue for G4S, which operates in 83 countries. If either is successful, the combined company would be one of the largest private sector employers in the world.
G4S, listed in London, is already the world’s largest private security company, operating prisons in the UK and immigration detention centers in Australia, as well as transport and security officers for customs and border patrols in the USA.
Illinois State Treasurer and Democrat-elect Michael Frerichs, whose office manages about $ 35 billion and invests in private equity funds, urged institutional investors to demand greater transparency from investors. two suitors.
“Neither of the two bidders has revealed to us the key aspects of their business plan, including how to manage the opportunities and risks in the event of a merger,” he told an online forum. by the Private Equity Stakeholder Project, a lobby group. “The vast majority of these employees are essential workers, which increases the stakes for all stakeholders to review this transaction.
Tobias Read, the state treasurer of Oregon, said he wanted to “learn more about how companies will deal with complex issues,” including how to protect the health of their workers in the midst of the pandemic. “Some companies don’t really listen to small investors. . . as elected officials we tend to have a bigger megaphone, ”he said.
G4S’s board of directors has recommended a takeover bid at 245p per Allied Universal share, which is backed by Warburg Pincus and the Canadian pension fund Caisse de depot et placement du Quebec. But G4S shareholders have yet to approve the deal and appear to be waiting for a higher bid from GardaWorld, backed by BC Partners. G4S shares closed at 260p on Friday.
Oregon and Illinois have already committed funds for allied owner Warburg Pincus
G4S has already come under scrutiny from investors. In 2019, Norway A $ 1 billion oil fund sold to the company after it discovered that migrant workers in the Middle East were harassed and paid lower wages than agreed.
the European works council, representing G4S employees, also wrote to shareholders asking bidders to both rule out job losses and meet ethical investment commitments.
The letter notes that Allied’s offer involves ‘future restructuring and potential layoffs’ alongside the offer of a one-year £ 2million contract to Ashley Almanza, the managing director of G4S for seven years, overseeing sales to Allied.
PayScale, which tracks salaries, reports that a G4S security guard in the UK earns an average of £ 8.32 an hour and a security guard £ 8.15 an hour. If Allied succeeds in buying G4S, the combined company would have around 760,000 workers worldwide, while if GardaWorld wins, the extended company will have 635,000.
Allied has already pledged to pull out of the G4S company which runs four of the 13 private prisons in the UK, although the company recently won a £ 300million contract with the Department of Justice to run a new prison in Northamptonshire.
GardaWorld has said it will cut the UK management team, including Mr Almanza, while retaining a seat in the UK. She is in talks with her banks – Merrill Lynch, Barclays, UBS and Jefferies – about how much she could increase her bid for the company following an aggressive campaign to discredit her rival.
“We will invest in the growth of the business, by empowering and inspiring G4S employees to provide excellent service,” said GardaWorld. “In contrast, an acquisition of G4S by Allied, which brings together two of the three major US players, would undoubtedly lead to massive restructuring in some states, affecting employees.
Allied said, “We value the skills and experience of G4S employees.”
G4S said that “an important part of entering into an agreement with Allied Universal is confirmation that the existing contractual and employment rights of G4S employees will be protected.”