The City licked its lips on Thursday after security giant G4S said that it was weighing up plans to spin off its cash-handling business.
The possible demerger or float of the cash delivery arm — which has 30,000 staff and operates in 45 markets — was unveiled by chief executive Ashley Almanza after a restructuring of the sprawling business this year.
The £1.2 billion operation has found the going tough after big contracts last year — such as one for Walmart — were not repeated.
Profits were also hit by factors including a spate of attacks on its security vans in South Africa. Developed markets are also waning amid a move away from cash towards digital payments.
Shares in G4S jumped 16.7p, or 9%, to 200p after news of the likely spin-off, which Almanza said “has the clear potential to enhance the focus and success of both businesses and thus to unlock substantial shareholder value”.
Offloading the cash business would also help cut debt, which stood at £1.56 billion as of the end of June.
G4S, which is being advised by JP Morgan, will update the markets on the review next year.
The likely move would follow Spanish rival Prosegur, which launched its cash-in-transit unit Prosegur Cash on the Madrid stock exchange early last year.
Cash delivery accounts for around 16% of G4S’s business, with any sale leaving it focused on its security arm including running prisons.
The Government was forced to bring chaotic G4S-run HMP Birmingham back under state control in the summer after a surprise inspection.
Analysts at RBC Capital put a potential £1.6 billion value on the cash arm.
The bank said: “We have been saying for a while that the group needed to focus — and get the net debt number down — and this would be a part solution to that, although just a separation wouldn’t solve the net debt issue.”
