What’s going on?

• A bidding war for G4S – the world’s biggest security firm – came to an end, with Allied winning over GardaWorld, and G4S shares dropped by their most in a year.

What does that mean?

• A rise in the fear of terror attacks has led to a rise in the global security market, and Allied Universal and GardaWorld are in the game. G4S (UK) is then thought to be the most delicious acquisition target, with its multiple crises over the last few years (e.g: lost prison contracts, alleged human rights abuses).
• GardaWorld was thought to strike whenmaking a hostile bid to take over G4S when its share price dropped, but Allied approached G4S more softly with acquisition talks until it finally won.

Why should I care?

For markets: Don’t count your chickens before they hatch

• G4S’s shares had risen 80% since the start of the rivalry, but when GardaWorld refused to raise its latest bid, investors sent them down 10%.
• So if you’re watching M&A participants’ stocks, remember that the process can lead to big price moves – and is only done until it is actually done.

The bigger picture: Regulators are also in the play

• Another big risk to the takeover process: block by regulators if they think it might hurt consumer choice or disturb a key national industry.
  • E.g: Canadian convenience store chain Couche-Tard was told it wasn’t allowed to take over French food retailer Carrefour by the latter’s government.

Content source: Finimize (2021) Out Of Order. Available at: https://www.finimize.com/wp/news/out-of-order/ [Accessed on Mar 5, 2021]