Security group G4s (LON:GFS) has pulled out of plans to push for a takeover of facilities management company ISS after a number of its major shareholders signalled their intention to block the deal at a meeting scheduled for November 2. G4S said it was disappointed to have cancelled the proposed deal, which emerged last month when the company announced an opportunistic swoop for ISS that would have valued it at £5.2 billion. Shareholders are understood to have been uneasy about the proposed purchase price – which would have involved a involve a 7 for 6 rights issue at 122p to raise approximately £2 billion – as well as the risk of G4S losing focus on its traditional security business.

Nick Buckles, the chief executive of G4S, said: “We are obviously disappointed that we have not been able to complete this transaction. We felt strongly that the combination of G4S and ISS would create a market-leading integrated security and facilities services company which would be well placed to meet the growing needs of customers and deliver significant investment returns at the same time. However, we respect the importance of shareholders’ views and, on the basis of feedback received since the transaction was announced, we have decided not to proceed. Our strategy will continue to focus on providing higher value, integrated security solutions to our customers and leveraging our expertise in key sectors, geographies and service lines. We will continue to acquire businesses which add capability to G4S to help drive the business forward. The G4S business continues to develop positively with organic growth of 5% in the first nine months of 2011.”

Alf Duch-Pedersen, the chairman of G4S, added: “We believe that developing our business towards an enhanced security and integrated facilities services model is the way forward in the longer term and we saw ISS as an excellent opportunity to achieve this aim. However, following the announcement of the acquisition, shareholders have raised concerns particularly over its scale and perceived complexity against the backdrop of current macro-economic uncertainty. We consulted our leading shareholders ahead of announcing the transaction, and based on the feedback received, felt confident to launch the deal. We have now discussed the merits of this combination with a significantly larger number of our shareholders and whilst they continue to express their overwhelming support for the standalone G4S…

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