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Following the hostile offer by GardaWorld of FTSE 250 security company G4S, on 30 September, the Employee and Worker Representative of the G4S European Work Council (EWS) and the GMB Union have come out publicly with their views on the proposed takeover.

Under Rule 25.9 of the Takeover Code (Code), employee representatives and pension scheme trustees are entitled to require the offeree to publish their opinions on the effects of an offer on employment and on the pension scheme. Since 2018, offerors have also been required to include details of their intentions for the business, employees, and pensions in the firm offer announcement (previously this information was only required in the offer document). This requirement to publish these details of the offeror’s intentions earlier in the process was intended to facilitate greater engagement from employees and pension scheme trustees on takeover transactions. To date these reforms have had limited impact, with only two instances of employees/employee representatives issuing an opinion on a takeover between 2018-2019. One of these was Melrose’s offer for GKN, which was also hostile and attracted considerable media and political attention.

The EWS statement raises a number of concerns, including calls for:

• greater clarity from both G4S and GardaWorld regarding their plans on increasing value and achieving organic growth for the company
• more transparent reporting within the annual report, including a dedicated section for trade union representatives’ views
• regular social dialogue with worker representatives at a national, European, and global level
• both parties to commit to securing jobs, both in the UK and globally, and
• both parties to commit to honouring the existing pensions arrangements

The statement also highlights unresolved human rights and labour issues involving both parties and encourages shareholders to carry out due diligence on both parties’  Environmental, Social and Governance (ESG) record.

The opinions have been included in G4S’s , which argues that the GardaWorld significantly undervalues the company and urges shareholders to reject the offer.

One of the novel features of the EWS statement is that it raises concerns about both the offeror’s and the offeree’s track records and this has been seized on by GardaWorld during its ongoing dialogue with shareholders. In its on 9 November 2020 GardaWorld pointed to G4S’s claims of being a ‘responsible employer’ whose ‘priorities embrace sustainable investment to secure the health and safety of our employees’ and has argued that these contradict the EWS statement.

GardaWorld currently has acceptances for its offer representing approximately 1.72% of G4S’s issued share capital.

Market Tracker will continue to monitor this transaction as it develops.