GFS LN

G4S PLC

Finance/Real Estate, Event Driven/Special Sit


Presented:09/22/2020
Price:£1.86
Cap:$4.42B
Current Price:£2.45
Cap:$10.36B

Presented

Date09/22/2020
Price£1.86
Market Cap$4.42B
Ent Value$5.18B
P/E Ratio170.73x
Book Value£0.35
Div Yield3.28%
Shares O/S1,547.23M
Ave Daily Vol6,417,901
Short IntN/A

Current

Price£2.45
Market Cap$10.36B
G4S Plc engages in the provision of integrated security and related services. It operates through two segments: Secure Solutions and Cash Solutions. The Secure Solutions segment comprises of security; which engages in incorporating risk consulting software, manned security, software and systems and integrated security solutions; Facilities management, includes integrated security and FM services and Care & Justice Services; comprises of custody, health, transportation, care and rehabilitation in the UK and Australia. The Cash Solutions segment consists of cash transportation, cash processing & ATM services, smart safes & cash recycling, cash technology, comprising software and service solutions. G4S was founded in 1901 and is headquartered in London, the United Kingdom.

Publicly traded companies mentioned herein: Brink’s Co/The (BCO), G4S PLC (GFS LN)

Highlights

The presenter is long shares of G4S PLC (GFS LN) and views this as a short-term, event-driven opportunity for investors. GFS operates two lines of business: Secure Solutions is a global market leader in security, and Cash Solutions is a cash management/transportation business that he likens to Brink’s (BCO). The presenter bought shares of GFS in January at GBp185. At the time, GFS was in talks with acquirers for its Cash Solutions business. While there was uncertainty at the time regarding the sale proceeds GFS would receive, the presenter was bullish since the company would be shifting from an ~80/20 (Secure Solutions/Cash Solutions) business mix to pure play security. Relative to cash management businesses, security garners a higher multiple and has less secular risk. On February 26th, GFS announced it would sell the majority of Cash Solutions to BCO for £660MM. In the days following this announcement, COVID-19 caused the market to sell off; over the span of a month, the company’s share price fell from ~GBp190 to ~GBp69. Today, the stock trades at ~GBp185 per share and the presenter believes GFS could be acquired by the end of the year at a valuation of GBp220 – GBp260. 

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