G4S, the security company, was recently hoping to complete a merger with ISS, a Danish cleaning business. The merger was supposed to be worth over £5 billion and the collapse of negotiations have significantly affected the company’s pre-tax profits. Profits have declined despite an increase in business from emerging markets.
G4S is a company that provide many security services, such as cash guarding and prison security. This year they are responsible for much of the security that is taking place around the London Olympics. It is estimated that the failure of the merger has cost the company around £50 million in a one-off cost. Had the merger gone ahead it would have been one of the biggest deals organised in 2011.
Despite the company seeing a near four percent increase in revenues when compared with last year, it is expected that the failure of the merger is going to cost the company around 20 percent of its pre-tax profits.
The chief executive of the group, Nick Buckles has commented, “Despite the poor state of the economy we have still managed to achieve a good amount of growth and despite the failure of this merger we still have confidence that 2012 will be a very good year for us. We have recently shown how confident we are of having a good year by issuing an eight percent dividend.”
The company has seen a good amount of organic growth this year and much of this has been in the developing world. About this Mr Buckles continued, “We estimate that around one third of all our profits are currently coming from the developing world and this is something that is probably going to increase in the future.”
G4S operates in over 125 countries and is currently expanding its footprint in emerging economies such as Brazil, India and China.