David Olive: GardaWorld vs. Caisse de depot:

David Olive: GardaWorld vs. Caisse de depot:
Garda’s bid for world dominance: GardaWorld Corp. used a strategy of growth by acquisition to become one of the world’s top five security-services companies in just over two decades.

In its most audacious move, the Montreal-based Garda last month made a hostile $5.2-billion takeover offer for the global industry’s largest player, Britain’s G4S PLC, a company about five times the size of Garda.

By definition, hostile takeover bids are ugly, but this one got messier still when Garda discovered that the Caisse de dépôt et placement du Québec is backing a subsequent rival $5.7-billion bid for G4S by U.S.-based Allied Universal Security Services LLC. The Caisse is Allied’s second-largest shareholder, with a 35-per-cent stake.

This is a David-and-Goliath contest. Garda has annual revenues of about $3.8 billion. The Caisse, one of the world’s biggest money managers, has assets of about $333 billion.

A voluble Stéphan Crétier, Garda’s founder and CEO, has kept up a relentless attack on the Caisse for weeks. He claims the Caisse is putting its pensioners’ money at undue risk by indirectly investing in a scandal-plagued G4S. Crétier accuses the Caisse of violating its mandate to support Quebec enterprises by backing Allied over his own firm in pursuit of the London-based G4S. And he says the Caisse is jeopardizing Montreal’s head-office status.

If Garda is foiled in buying G4S, Garda, itself, might become takeover bait for an offshore buyer, in a rapidly consolidating security-services industry.

The Caisse might thwart Garda’s ambitions: As godfather to Quebec Inc., the Caisse is unaccustomed to rearguard attacks. But the slow-to-anger Caisse lashed out at Garda last week, with a formal legal statement putting Garda on notice that the Caisse is preparing to seek “remedies for the damage suffered as a result of false words made by Garda and its representatives in the public square.”

The bad blood between Garda and the Caisse traces back to last summer, when Garda was rebuffed in trying to recruit the Caisse as a financial partner in its G4S bid. Instead, the Caisse offered to buy about $1 billion worth of Garda preferred shares, an offer that Garda CEO Stéphan Crétier promptly rejected as high-priced debt, not unlike the sweet deal the Caisse negotiated for itself in “rescuing” Bombardier Transportation.

The Caisse first warned Crétier to stop his public attacks on the fund manager on Nov. 9.

But the Garda CEO has persisted.

Crétier’s gambit is to align Garda with the likes of Bombardier Inc. and SNC Lavalin Group Inc. as firms whose Montreal head offices must be protected, a top priority for the Coalition Avenir Quebec government.

The Caisse has angrily responded to that ploy, a threat of government intervention in the Caisse’s affairs, by saying it won’t be intimidated by Garda. Asserting that its own public statements are unalloyed facts, the Caisse implies that Garda has been a fountain of falsehoods in this remarkable, unusual dispute.
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