EmailA second British security firm looks set to fall into foreign hands, with Securicor - owner and operator of Parc prison at Bridgend - confirming yesterday that it was in merger talks with Denmark's Group 4 Falck.
The proposed tie-up would create a corporation worth up to $3bn (£1.6bn) and follows last year's takeover by United Technologies Corp of UK-based Chubb.
Group 4's British subsidiary, Global Solutions (GSL), is being investigated in a public inquiry over the 2002 fire which destroyed part of the Yarl's Wood immigrant detention centre it operates.
There are also allegations of racist bullying by its staff there that surfaced just before Christmas.
Securicor, which handles £1.2bn of cash every day for banks and businesses, insisted that "discussions are at an early stage and there can be no assurances that any agreement will be reached".
Group 4's financial director, Derrick Miller, said talks had been going on for a couple of months and he expected a firm deal "in a matter of weeks".
Under the plans, Group 4 would demerge its safety and rescue division and its global solutions business into a separate group quoted in Copenhagen.
The bulk of Group 4 plus Securicor would be listed in Copenhagen and London after a possible nil-premium merger which looks unlikely to be disrupted by an outside bidder.
Shares in Securicor were up 3.5% to a 12-month high at 116p while Group 4 stock was also up slightly, at Dkr131. Put together the two businesses will still be slightly smaller than Securitas, the Swedish-based world number one.
Not everyone is excited by the merger plans, with analysts at brokers ING saying they looked disappointing for Securicor shareholders who had hoped to extract cash from their "perenially poorly performing shares".
Securicor has been trying to make itself more attractive to investors and potential predators in recent years by selling off peripheral interests. These include its 40% stake in telecoms company Cellnet - now MMO2 - and its half share in its mail delivery operation with Deutsche Post.
Securicor, which employs 20,000 people in Britain and 100,000 worldwide, is still hampered by worries about the future of its airline screening business in the US, Argenbright Securities, which has received several lawsuits resulting from the hijacks on September 11 2001.
Securicor has at least £1bn worth of insurance to cover such eventualities and the company is optimistic after initial comments from the FBI.
The security forces have suggested that there was no negligence on behalf of airport security staff at Newark and Dulles airports, where the hijackers had taken off.
Brokers at Dresdner Kleinwort Wasserstein said in a research note issued before the talks with Group 4 were confirmed that the litigation issues were "overblown". It said the operational performance of the business was "relatively solid", given the extremely tough trading conditions.
Group 4 has become a major player in outsourced government services under the private finance initiative and public private partnerships in Britain, Australia and South Africa. It runs the new GCHQ spy headquarters in Gloucestershire.
