G4S barred from wooing Shield Security clients

Staff Writer | Friday June 15, 2012 00:00

 

The order is with effect from June 01, 2012. It bars G4S Botswana from 'interfering with Shield Security clients' during the ongoing transition to new owners, Sancos MD Enterprises.

Sancos, a company owned by Shield Security minority shareholder, Domi Sankie, recently secured a takeover deal with the security company's founding and principal shareholder, Graham Phillips. Under the deal, Shield Security will continue to operate as usual, with the change being at ownership level.

It is understood the authority has a list of Shield Security clients and has conditionally ordered G4S not to solicit these for the next two years. 'The restraint shall only elapse should Sancos trading as Shield Security close down or sell its business subject thereto that the closing down is not due to the fact that G4S directly or indirectly solicited clients,' reads the letter.

'(The restraint shall also elapse if) there is a change in management control and/or majority shareholder control in Sancos at any time whatsoever.' The Competition Authority's order appears to be designed to protect Sancos' takeover of Shield Security, which follows a three-month tussle following the authority's rejection of G4S' bid for Shield.

Market observers told Mmegi Business that the wording of the order was designed to bar G4S from either courting the new entity's clients or enticing the new owner to sell off. The observers explained that Shield Security's key asset is its gilt-edged client portfolio which features some of the country's biggest financial institutions.

In the same letter, the authority said it did not consider the transfer of Shield's business and assets to Sancos a 'notifiable transaction,' clearing the way for the deal's finalisation. '(This is) considering the fact that Sancos is a shelf company owned by an existing shareholder of FMG and that Shield is repositioning its market existence following rejection of the takeover transaction involving G4S,' the correspondence reads.

FMG (Facilities Management Group) is Shield Security's former holding company. Late April, the Competition Authority rejected G4S Botswana's bid for Shield Security, saying the acquisition of the security company would substantially lessen competition in the market. Following the rejection of the bid, Shield Security informed its clients it would close and began winding down, before the Competition Authority stepped in querying why a profitable business would close.

The CA ordered Shield Security executives to halt the closure, with the minority shareholder subsequently making a successful bid for the business. Meanwhile, G4S Botswana has finalised a P11.7 million deal to acquire FMG's other two subsidiaries, PS Cleaning and FMG Management.

Yesterday, a statement from the company said the purchase price paid had been reduced 'due to the fact that the security division of FMG was disposed of prior to completion' of the deal.