G4S: History

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For a full timeline, see: www.g4s.com/en/Who%20we%20are/History/

The G4S story starts in the early 20th century, when two enterprising Danes, Philip Sørensen and Marius Hogrefe, founded the guarding company København Fredriksberg Nattevagt in 1901. Soon after, in 1906, Sophus Falck established Redningskorpet.[1] Redningskorpet, which later changed its name to Falck, started off providing guarding, ambulance and fire engine services. In 1988 the Falck family sold the company to Baltica, a Danish insurance company, that went on to sell off 55% of Falck to a number of other major insurance companies. During the 1990s, Falck expanded in Europe by acquiring several companies (Patena Security in Sweden, Falken in Norway, SIMIS in Germany, Sezam Sp. z o.o. of Poland, AS ESS, a security operator with companies in all Baltic states, and Nederlandse Veiligheidsdienst (NVD), the largest security operator in the Netherlands). In 1950, the Sørensen family consolidated its businesses as ‘Securitas International’.

In 1963, Store Detectives Ltd and Securitas Alarms Ltd were set up by the family in the UK. Jørgen Philip Sørensen was appointed managing director of the UK part of the group in 1965. The UK part of the business was organised under the name Group 4 from 1968 onwards. In 1981, the activities of the Sørensen family were split up into Securitas AB (the Swedish activities) and the Group 4 group (the rest of the European activities). Group 4 moved on to expand to several countries all over the world (India, United Arab Emirates, Ukraine, Turkey, etc.). In 1990, the group acquired American Magnetics Corporation, which specialised in access control systems. This helped Group 4 Falck win the highly prestigious contract to handle security at the Pentagon.

After the merger of Group 4 and Falck to form Group 4 Falck in 2000, the expansion continued with several acquisitions - ADS in Germany, SOS in Austria, SPAC in Finland, BOS in Czech Republic, Unikey in Norway and Banktech in Hungary. Growth in Indonesia, Kazakhstan and the republics in Central Asia (especially in the oil and gas sector) saw profits increase 20% in 2001. It also acquired the security company Euroguard (France).

The 2002 acquisition of the Wackenhut Corporation added a new and disturbing section to Group 4 Falck’s corporate history. Formed in 1954 by former FBI agent George Wackenhut, its first major coup was the collection of two million files on US citizens implicated in the McCarthyite witch hunts of the 1950s.[2] In the 1970s, the company was implicated in supplying chemicals for weapons to Iraq.[3] Since then, it has diversified into incarceration and other areas of security.

The really big one came in July 2004: the merger of Group 4 and Securicor to create the modern Group 4 Securicor, or G4S, as it is more commonly known. By 2007, now with England's Nick Buckles at the helm, G4S entered the FTSE 100 of leading companies on the stock exchange. Since then it has made around £1 billion worth of acquisitions.

Most recently, the Cotswold Group Limited, the UK’s market leader in surveillance, fraud, analytics, intelligence and investigations services, and Chubb Emergency Response, one of the UK’s leading key holding and response services, have entered the fold.[4] In November 2011, however, G4S' rise was checked by the failed acquisition of rival security and services company ISS. The brainchild of Buckles and other members of senior management, a plan was hatched to finance the £5.2 billion acquisition by borrowing £3.7 billion through a debt facility organised by Deutsche Bank, HSBC Bank and Royal Bank of Scotland, plus a £2 billion rights-issue (essentially issuing additional shares and encouraging existing investors to buy them).

Unfortunately, when Buckles and his fellow brains-trusts got round to mentioning this to G4S investors, the reception wasn't as positive as they had hoped. Parvus Asset Management and others balked at the rights issue and taking on so much debt for what they saw as a risky and over-ambitious move and put the kibosh on it. Alf Duch-Pedersen was the major loser, stepping down from his position as chairman.

The ISS failure was a body-blow to G4S' ambitions but not a knockout. Since then announced new public sector contracts and has issued a £600 million bond, which has been very popular with investors. Anyone looking to stop G4S’ abuse should not put much faith in 'the market'.

References

[1] G4S, ‘Our History’, www.g4s.com, accessed 15.5.12

[2] C Marshall, The Last Circle, Lycaeum Books, 1994

[3] S Rintoul, ‘Detention company’s murky origins’, The Australian, 28.12.02

[4] G4S, ‘G4S Acquires Chubb Emergency Response’, www.g4s.com, 19.3.12