(Bloomberg) – Sachem Head Capital Management believes GardaWorld’s £ 2.9 billion ($ 3.7 billion) takeover bid for G4S Plc understates the company, people familiar with the matter say.
The New York-based hedge fund, one of the largest holders of G4S with a 5.74% stake, is not opposed to a sale of the company at a higher price, the sources said, adding that similar deals in the industry traded at higher multiples. It is not known at what price Sachem Head would support a sale.
The company also believes G4S, which provides guards at everything from airports to prisons, has not been as negatively impacted by the coronavirus outbreak as the share price currently reflects, people said, asking not to be identified because the matter is private. While its European activities, geared towards airports, events and tourism have seen their operations affected, the US branch has been more resilient, they said.
A representative for Sachem Head declined to comment. G4S shares fell 2.2% at the start of Friday’s session. They were down 1.3% as of 8:34 a.m. in London, giving the company a market value of around £ 2.9 billion.
“We look forward to speaking to shareholders at the appropriate time and sharing our thoughts on the difficulties and challenges facing G4S,” said a representative from GardaWorld in a statement.
Sachem Head is not the only one to have this point of view. Harris Associates, another of the biggest holders of G4S, said earlier this week that he believes the company is worth more than the current offering.
Montreal-based GardaWorld on Monday appealed to G4S investors to help management get to the negotiating table. A cash offer of 190 pence per share would be “of clear and immediate benefit” to shareholders, customers, employees and members of the company’s pension plan schemes, he said at the time.
G4S rejected the offer, which it described as “very opportunistic” and undervaluing the company.
Canaccord Genuity Group Inc. also called the offer “opportunistic and very cheeky” in a note to clients this week, saying that if Garda and its backer, BC Partners, are not going to “engage in such a way. reasonable, we think they should stop distracting management after this third low-ball offer.
Garda’s latest offer was his third unsolicited approach to G4S since June 26, and follows a failed move by the Canadian company last year.