Buyout pair mulls options after £5.2bn ISS sale collapse

EQT and Goldman’s sale of Danish services group ISS has collapsed after shareholders in G4S, the acquirer, vetoed the £5.2bn deal.

The £5.2 billion (€6.1billion ; $8.3billion) sale of ISS to UK-listed security group G4S has collapsed after the latter’s shareholders voted against the merger.

ISS’ owners, buyout groups EQT Partners and Goldman Sachs Capital Partners, will now be forced to explore other exit options for the business.

The shareholders, which included second-largest stakeholder Harris Associates and others such as Parvus, Schroders and Artemis, were wary both of the significant debt facility needed to back the deal, and the threat of the merger causing G4S to lose its core focus on security, according to reports. ISS provides cleaning, security and catering services.

Although there is no break fee due to FS Invest (the EQT and Goldman holding vehicle), a spokesman  said ISS does not expect to incur material costs as a result of the termination of the deal.

Ole Andersen, chairman of ISS, said in a statement: “In July our owners were approached by G4S proposing to combine our two companies. There was a strong industrial and commercial rationale in the proposal and therefore we pursued the opportunity.  However, it became evident after the announcement of the potential combination that G4S's shareholders would not support the acquisition, due to the size and perceived complexity of the deal against the current macroeconomic backdrop.”

ISS chief executive Jeff Gravenhorst said the merger “would have been a real game changer in the global service industry”.

EQT spokesman Johan Hähnel added: “We remain committed to the company and its management, and fully support the operational strategy which has created proven and sustainable growth over the past 6 years. ISS will continue operating as a strong independent service provider and will maintain and defend its position as the global leader in integrated facility services. This summer – before the approach from G4S – ISS successfully amended and extended its debt facilities, enabling ISS to continue growing its business organically on a “business as usual” basis for several years to come.”

ISS has roughly doubled its revenues, profit, employee numbers and exposure to emerging markets since EQT and Goldman acquired the business in 2005 for about €3 billion, according to the statement.