G4S takeover - what to do with shares

jtaytay

I received a few thousand shares in G4S from an inheritance some years ago. I've left them untended and just thought that G4S, over time, is likely to be fairly safe. I've now heard within the family of a takeover by an American company/corp and some advice that a relative received from a broker was that there was a possibility, unless the shares are sold soon, they could end up having little value. I speak from a position of ignorance of share investing but, not surprisingly, have an urgent feeling I need to find out more. Could anyone help with a few things, specific and general, to push my learning curve quickly:

1.  Specific to G4S - what to do given the inherent risk of holding shares. Is it likely the shares I have will plummet/become valueless? Might it be a realistic expectation that they would stay stable or increase after the takeover? Could it be a case of being forced to accept the offered value per share in the takeover bid or could I hold onto the shares, if I would like? Will the shares be replaced by others etc. I know I'll have to bury into some paperwork at this end, but hoped someone on the forum might be clued up on these things.
2. If I want to get to grips with my small shareholdings, I'd like to be able quickly and easily (and cheaply) to manage them, probably online. Any recommendations for how to do this and through whom? Also, how easy and quick is it to move my paper shares into an online setup? 
3. If I want to sell my shares now, what is the quickest, easiest, cheapest way to sell my 'paper' share certificates. The relative who updated me on what is happening with G4S told me her broker said they were not handling sales of certificates at the moment due to Covid. Don't see why that should be or if it is true and a widespread practice. Is it true that there's a moratorium among some brokers to handling share transfers/sales?

Any help would be appreciated. And, very happy Christmas to everyone

Chris

masonic

It is generally advisable to sell single company shares you acquire that are not part of a balanced portfolio of shares as soon as practicable, due to concentration risk. Several online stockbrokers/investment platforms will allow you to deposit paper share certificates for free, from there you can sell them and reinvest in a broader investment fund that spreads the risk over many companies/assets.

Turning to the G4S shares specifically, their current value will almost certainly have any future price expectation priced in, so if what you have been told is correct they would already have fallen significantly.

MaxiRobriguez

Your shares won't become valueless but I'd sell them. The price has bounced back from the sell-off earlier this year so you're not crystalising a bad loss any more and you can use the proceeds to buy a more diversified investment which will suit someone hands off like yourself.

bowlhead99

jtaytay said:

1.  Specific to G4S - what to do given the inherent risk of holding shares. Is it likely the shares I have will plummet/become valueless? Might it be a realistic expectation that they would stay stable or increase after the takeover? Could it be a case of being forced to accept the offered value per share in the takeover bid or could I hold onto the shares, if I would like? Will the shares be replaced by others etc. I know I'll have to bury into some paperwork at this end, but hoped someone on the forum might be clued up on these things.

G4S received two competing cash offers, one unsolicited from Gardaworld / Fleming inc and one from Allied Universal for 245p a share, the latter of which the board of G4S recommend despite Gardaworld increasing their offer to 235p. In respect of the AU bid, the buyer needs to get regulatory approval etc but already has its US antitrust approval and the finance in place to pay for it, and has put £38m of cash into an escrow account to pay a break fee to the company if they pull out of the deal. Clearly "it ain't over til it's over" and shareholders have agreed to it, but the risk of the AU deal falling through and the Gardaworld offer going away as well seems remote.

If it all went titsup somehow and suddenly neither of the suitors wanted the company any more, you could expect a short term 'plummetting' of the share price (as the offer prices were considerably higher than the share price immediately prior to the announcement), but it seems highly unlikely that the company would go from being worth almost £4bn in cash to a buyer today to being suddenly 'valueless' as you suggest. You would only get that if something comes up to derail the deals like a massive accounting fraud showing all the revenues and assets that the company has been reporting are a big hoax.  At the moment despite the cash offer price being 245p, the share price in the market is 254p because some investors hope that one of the bidders or some other bidder might offer a bit more in order to satisfy the current shareholders and convince them to agree to being taken over.

The recommended offer is a cash offer to buy all the shares of the company., after which Allied Universal will be the owner of G4S. Once they buy all the shares of the company, the company will no longer have a reason to be listed on a stock market with a published price, so any thought of 'would the share price stay stable or increase after the takeover' is irrelevant. You will no longer be a shareholder, because the method of takeover is them buying your shares and everyone else's shares to 'take over' the company. They do not want to own 99.99999% of the company and have Mr jtaytay as the 0.00001% co-owner with them, and you would not want to be a private investor in a company that did everything in its own interests without regard to your wishes. 

If they meet the threshold under the listing rules for enough people accepting their purchase offer they can compulsory purchase the rest. So forget about "holding onto the shares, if I would like", because (a) you would not like, (b) you are unlikely to be allowed as they'd have no real interest in accommodating you, as all you could cause them is trouble or hassle without any benefits - you are not going to be offering to help bankroll the company with a few more billions of equity or debt injections.

2. If I want to get to grips with my small shareholdings, I'd like to be able quickly and easily (and cheaply) to manage them, probably online. Any recommendations for how to do this and through whom? Also, how easy and quick is it to move my paper shares into an online setup? 

Relatively easy to move to any number of execution-only brokerages where the shares are held by the broker in their name as nominee with you as beneficial owner and you can control your account online and make sales or purchase orders online. A cheap and cheerful one from a reputable company is Jarvis's http://www.x-o.co.uk which allows UK share trades at £5.95 a pop and doesn't currently have any inactivity fees if you create the account and deposit the shares but don't want to do anything with the shares for a while.    If the amounts involved are large and you plan to keep the shares for a long while, you might like to consider selling all the shares and moving the proceeds into a S&S ISA where you could use the money to buy back the shares (or buy some other suitable investments instead). Then you won't ever need to worry about capital gains taxes or dividend taxes on proceeds you get in future.

 As you would need to fill out forms and send them the share documentation and it takes a few working days, I expect a Christmas Eve during Covid isn't the most efficient time to start. But you can open the account and then send them the shares after.

3. If I want to sell my shares now, what is the quickest, easiest, cheapest way to sell my 'paper' share certificates. The relative who updated me on what is happening with G4S told me her broker said they were not handling sales of certificates at the moment due to Covid. Don't see why that should be or if it is true and a widespread practice. Is it true that there's a moratorium among some brokers to handling share transfers/sales?

Some brokers have stopped handling paper these days because they don't need the business but generally most are happy to accept you depositing paper shares from time to time because it gets them a customer. However, Covid has meant that (a) they don't want to receive diseased pieces of paper in the post and (b) their staff may be stretched and working from home and not have much appetite to come into their city centre offices to open the post and validate your share certificates when they can offer every other aspect of their service including call centres and trading desks from the employees' bedrooms. 

So it's true that some big brokers have said that they are having a temporary hold on receiving paper share certs, and have put messages to that effect on their websites. If you are in doubt about whether a particular broker or investment platform will accept them, call them up.  I have an account with the aforementioned x-o.co.uk and there are no website messages or communications about them not handling paper.

For some of your holdings you may find that the company sponsors their registrar to carry out some limited stockbroking service for a nominal fee (e.g. computershare or equiniti offer this) and so if you just want to sell out of a company quickly without holding a portfolio online it is sometimes worth using them rather than perhaps take a bit longer to establish a proper dealing account with a mainstream broker.  G4S use Link Asset Services as their registrar. In your position I would just use x-o. I do also have an account with AJ Bell Youinvest (Can I deposit a share certificate into my AJ Bell Youinvest Dealing account? | AJ Bell Youinvest) who have a more comprehensive service for investing into UK and international shares and funds, but if you just have simple UK shares to sell they are not as cheap as X-O.co.uk

jtaytay

A big thankyou for your replies and, Bowlhead99, forgive the pun, but bowled over by the speed and detail of your reply. I'm still digesting all the info, but this seems the best sort of info I was hoping to receive. I'll share the info with other family members who'll also be very appreciative. 

Chris

westv

Related to G4S shares, we found mention of the Securicor Share Scheme in my late mother's documents. The document mentions Abbey National and an account number so must be very old and is also in my late father's name - who died in 2010.
The fact that it still mentions my father makes me think there are no longer any shares but  we'll still investigate.