G4S is fighting back against its takeover
(Picture: PA)They got the old gang back together.
Today’s RSA takeover sees M&A big beasts Simon Robey, Simon Warshaw and Karen Cook back on the line-up of deal advisers just like the good old days.
The trio — Cook at Goldman Sachs and Robey and Warshaw at their eponymously named boutique — were in the papers every day in the M&A boom days of yore.
Recent years have seen them fade from the pink pages as deals grew thin on the ground. Now they’re well and truly back.
Together, they sold Centrica’s Direct Energy for $3 billion in the summer, and, in Cook’s case, flogged engineer Weir to Caterpillar last month.
M&A is on the charge again.
While millions of Brits are on furlough or laid off, London bankers, accountants, and lawyers are busier than ever on deals.
If that surprises you in these uncertain times, it shouldn’t.
Remember, this is a crisis caused by pandemic, not capital.
Private equity firms and corporates are sitting on $2.6 trillion of capital they either had already or raised during Covid.
As valuations of companies have fallen, they’re starting to spend it.
For shareholders of the bid targets, this leads to a dilemma.
On the one hand, you can shout at your board for accepting lowball, opportunistic deals — witness McCarthy & Stone.
Why sell at these prices, with a vaccine around the corner, investors have argued?
Some, such as G4S and Sportech, have heeded their shareholders and rejected bids for being too low.
The other view is this: we’ve been promised Covid would soon be over many times before. Better to have cash in your hand now than risk a long drawn-out recovery.
Tough decisions for investors, happy days for bankers.
