Olympics Security Fiasco Costs G4S As Shares Plunge
G4S's shares plunged as much as 10% as investors reacted to the admission by the world's biggest security company that it "would not be able to provide enough guards for the Olympics," according to Gill Plimmer of the FINANCIAL TIMES. The estimated £50M ($78.1M) hit to the company, continued uncertainty over the future of its CEO Nick Buckles. Chair John Connolly met leading investors amid speculation that Buckles "may be forced to resign." Connolly, who only joined on June 8, has urged against "knee-jerk" reactions, but in an interview with the FT "declined to express outright support for the CEO." Seymour Pierce Analyst Kevin Lapwood said, "Clearly he's [Buckles] got to go. We think he will fall on his sword along with other senior management (FINANCIAL TIMES, 7/16). In London, Travis & Taylor reported that the slide in the G4S share price "reflected the Olympic-sized blow to the private security company's reputation" not only in Britain but throughout its global operations. G4S is now the largest player in global security, with "8% of the market and contracts" that include protecting ships from pirates in the Indian Ocean, and supplying security systems to the Pentagon. However, its proud boast to be "securing your world, in more ways than you might realise" has been dealt a massive blow by overstretching itself on such a high-profile contract. G4S's global operations, with a turnover of £7.5B ($11.7B) a year, will help it ride out the storm, but the "damage will be keenly felt in its British operations." The company has 52,570 staff in the U.K. and Ireland, more than 50% of whom are "involved in public sector contracts" worth more than £1B ($1.6B) a year (GUARDIAN, 7/16). Also in London, Taylor & Booth reported that officers from nine police forces are "drafted in to fill the gaps in Olympics security." It emerged that hundreds of officers from forces across the country were "being drafted in to work alongside the extra 3,500 military personnel." Assistant Commissioner Chris Allison, the National Olympic security co-ordinator, said that officers from Dorset, Surrey, Hertfordshire, Northumbria, South Wales, Strathclyde, West Midlands, Thames Valley police and Greater Manchester "had been deployed to provide security at venues in their areas" (GUARDIAN, 7/16). The FINANCIAL TIMES DEUTSCHLAND reported that G4S temporarily lost about £400M ($625M) of its market value. Buckles is "already banged up" after the acquisition of Danish cleaning company ISS for an estimated £5.2B ($8.1B) failed (FINANCIAL TIMES DEUTSCHLAND, 7/16).