The Times - UK (2020-09-15)

the times | Tuesday September 15 2020 1GM RM 33

Business

Robert Lea Industrial Editor

G4S, the world’s largest security

company, has come under a hostile

takeover attack from Gardaworld, a

much smaller Canadian rival.

The Canadian multinational, con-

trolled by BC Partners, the private equity

firm, has made an all-cash £2.96 billion

offer for G4S, having had three app-

roaches rebuffed during the summer.

The offer at 190p a share values G4S,

a former FTSE 100 constituent, at

30 per cent more than where its stock

closed at the end of last week and at

nearly double where the shares were

trading when BC Partners first made an

informal approach in June.

G4S, which employs 570,000 people

worldwide, has an annual turnover of

£7.7 billion. It was created by a merger in

2004 between Securicor — once a co-

owner of the company that became O2

— and its rival Group 4 Falck, itself the

product of an Anglo-Danish merger.

Gardaworld has annual revenues of

£2.2 billion and employs 100,000 people.

After its failure to persuade G4S’s

management to engage with it this

summer, the Canadian company went

public yesterday, sending G4S’s shares

soaring from deflated lows and immedi-

ately sparking a war of words.

Gardaworld said that G4S’s manage-

ment had failed. Its target shot back,

indicating that the approach was a low-

ball offer from private equity, aimed at

a big company whose stock had been

depressed by the pandemic.

After unsubstantiated reports that a

private equity bid was on the horizon

commodities currencies

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Aug 14 24 Sept 2 10 Aug 17 25 Sept 2 9 Aug 17 25 Sept 2 10 Aug 17 25 Sept 2 10 Aug 17 25 Sept 2 10

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Employees at Arm Holdings will re-

ceive windfalls averaging £176,000 after

the sale of the chip designer to Nvidia.

The world’s largest semiconductor

maker is to hand shares worth $1.5 bil-

lion to Arm staff when the $40 billion

deal is completed. Jensen Huang,

Nvidia’s founder, said that the award

would comprise an acquisition payout

and retention bonuses vesting over

Arm employees to receive share of $1.5bn after American takeover

Simon Duke several years. Arm employs 6,500
people worldwide, including 3,000 in
Britain. It is the second large payment
for staff of the Cambridge-based com-
pany, which was bought by Softbank, of
Japan, four years ago. Staff reportedly
shared £380 million from that deal.
Nvidia’s investors cheered the take-
over. Its shares rose by 5.8 per cent yes-
terday to add $20 billion to its market
value, half the cost of the acquisition.
However, the sale of Britain’s most

successful technology company has

been criticised by unions and some of

Arm’s former backers and employees.

Hermann Hauser, who helped to estab-

lish the chip designer in the early 1990s,

said the takeover would be a “disaster”

for the British tech sector and would

lead to heavy job losses in Cambridge.

Mr Huang, 57, pledged to increase

headcount in the UK and said Nvidia

would build a research centre in Cam-

bridge to develop AI products. Nvidia

would work with the government to “ad-

dress any concerns they have”, he said.

Ed Miliband, the shadow business

secretary , said it was “absolutely vital...

those promises have weight and, criti-

cally, they must not be time-restricted”.

The prime minister’s spokesman said

the government would “scrutinise [the

deal] in close detail, including exactly

what it means for the Cambridge HQ”.

The government is expected to impose

strict conditions on the takeover and

could refer it for a lengthy review by the

Competition and Markets Authority.

Softbank will become Nvidia’s largest

shareholder and the company could

make a small profit on the £26 billion

Arm acquisition, provided the British

company hits its targets. It will receive

$12 billion in cash upfront, $21.5 billion

of Nvidia stock and a further $5 billion

in performance-related payments.

Leading article, page 27

Changing hands again, pages 34-35

Gardaworld launches £2.96bn all-cash offer

Canadian

rival makes

bid for G4S

for Capita, another government con-

tractor, City commentators said that

the BC Partners-funded approach to

G4S could be the first of many attacks

from cash-rich buyers for struggling

British companies.

Shares in G4S have been recovering

since pandemic-related market sell-

offs sent them tumbling from more

than 200p to 69p. Yesterday the shares

jumped by 37p, or 25.5 per cent, to

182½p, still short of Gardaworld’s offer,

an indication that investors believe that

G4S’s board won’t play ball and that BC

Partners is not prepared to go higher.

Gardaworld’s statement revealed

that it had first approached the G4S

board in June. That became more

formal with a letter to the G4S board at

the end of August. When there was no

response and with Gardaworld reason-

ing that G4S would not be engaging, it

went public, suggesting that investors

might want to ask questions of the com-

pany’s management.

Gardaworld said that G4S’s manage-

ment, led by Ashley Almanza, 57, its

chief executive, had failed to deliver for

shareholders, customers, employees or

the public.

Referring to G4S’s chequered history,

from its inability to recruit enough

security staff for the 2012 London

Olympic Games to its recent £44 mil-

lion out-of-court settlement to avoid

criminal charges over lying to and

defrauding the Ministry of Justice over

offender tagging, Gardaworld said:

“G4S needs new, professional and ex-

perienced leadership to build a credible

Continued on page 36, col 1

NIKOLA

TikTok in surprise deal with Oracle

Tom Knowles

Technology Correspondent

TikTok’s Chinese owners have sub-

mitted proposals to the Trump admin-

istration for a partnership with Oracle

in an attempt to prevent it being

banned in the United States.

In a move that shocked Wall Street,

Bytedance rejected a bid for its US

operations from Microsoft, preferring

the software provider’s proposal.

Bytedance has been given until next

week to announce a sale of its US oper-

ation by the White House or else it will

be shut down in the country.

Its TikTok app is hugely popular with

teenagers and allows users to create

and view short video clips. It has been

downloaded two billion times world-

wide and was the first Chinese-owned

app to be a worldwide success.

However, the Trump administration

claims that Bytedance could be passing

data on TikTok’s American users to the

Chinese government. Bytedance has

vehemently denied it would do this.

Instead of a full sale, Bytedance has

proposed a “technical partnership” deal

for its US division, which would enable

data on American users to be handled

and safeguarded by Oracle.

Steven Mnuchin, the US Treasury

secretary, said that the Committee on

Foreign Investment, which can block

deals on national security grounds,

would review the deal this week and

would decide if it protected the private

data of Americans. It will then make a

recommendation to the president. Mr

Mnuchin told CNBC that the deal with

Oracle would include establishing a

US-based headquarters for TikTok

that would create 20,000 new jobs.

Oracle confirmed that it was “part of

the proposal submitted by Bytedance to

the Treasury Department”, adding that

it had a “40-year track record providing

secure, highly performant technology

solutions”.

The deal beat a combined offer from

Microsoft and Walmart. Microsoft said

on Sunday that it was confident its pro-

posal would have been good for users

while protecting national security.

Dan Ives, an analyst at Wedbush

Securities, said Microsoft was unlikely

to have accepted a sale that did not

include TikTok’s algorithms and that

was probably why the deal had failed.

Nikola, the American maker of electric lorries whose business

was described by the hedge fund Hindenburg Research last

week as “a $20 billion cloud of smoke”, has admitted to filming

one of its trucks rolling downhill in a marketing video. Page 35

Yes we did fake video,

admits truck company