Is this the final nail in the coffin for the G4s/ISS deal?
Statement from Harris Associates.
In a word, yes.
Harris (4.9 per cent) is the third biggest shareholder in G4s and it’s difficult (in fact almost impossible) to see the highly ambitious £5.2bn deal being voted through at Wednesday’s EGM without the support of the influential Herro. Especially as his intervention follows reports that Schroders and Artemis are also planning to vote against the deal.
Or as broker Olivetress Securities put it on Monday afternoon:
To us this is a killer punch – Harris are 5% shareholders and will carry significant influence. They have a history of activism and adding this to the smaller stakes who have already voted no – the dissenters are probably already at a stake large enough to block this deal from happening. Not impossible, but this has to materially affect the probability of this deal.
What this means for the G4s share price is more difficult to call.
Sure, the stock has fallen sharply since the deal was announced…
… and there will be a huge sigh of relief and a rally if its voted down. But then what? Do Buckles and his board have a plan B? What is their strategy? To focus on the security market? Or to make smaller, bolt-on acquisitions in the facilities management sector?
With the answers to those questions likely to prove elusive for some time, expect any share price recovery to be short lived.
Related links:
Presenting G4SISS – FT Alphaville
G4S deal ‘too risky’, says top shareholder – FT