March 02nd 2020
Brink’s to Acquire Bulk of G4S Cash Operations for $860 Million
Due to the decline in cash usage and the significant fixed costs associated with processing cash, the Cash In Transit (CIT) industry has seen a great deal of consolidation in recent years. In particular, two major players, Loomis and Brink’s, have been hoovering up the market with acquisitions.
Valued at around $860 million, the G4S deal increases Brink’s’ global market share of the CIT market to around $725 million, bolstering the cash management company’s global dominance – as seen in Figure 1.
Considering the shifting economics in the CIT market, it’s not surprising Brink’s has closed operations in a number of markets – including Ireland, Belgium and Germany. These exits highlighted a shift of concentration towards markets with high levels of cash usage, as illustrated by Brink’s’ acquisitions of Robodan in Brazil ($130 million), Maco Transportadora de Caudales in Argentina ($209 million) and Dunbar in the U.S. for approximately $520 million – one of the largest acquisitions in the CIT market. Whereas, Loomis has recently acquired; Nokas in Sweden ($26 million), Cobelguard in Belgium ($13 million) and Kotter ($15 million) in Germany.
The deal will bring Brink’s to 14 new markets in Eastern Europe and the Asia Pacific region, as well as the Netherlands, Belgium, Ireland and the Czech Republic. Entry into Malaysia, Indonesia and the Philippines is consistent with previous acquisition behaviour of entering markets with high cash usage. Furthermore, Brink’s’ entry into the Netherlands means they will be the only major provider of CIT services.
G4S, on the other hand, has slipped over the years in their CIT dominance, with its largest cash business in the UK making losses in recent years (£3 million in 2018 ) and the sale of their Canadian cash business to Garda in 2014. The UK cash G4S business has been excluded from the deal and G4S has confirmed there will be no changes for UK clients.
Merchants that currently have operations with G4S or Brink’s should monitor their arrangements carefully, to ensure they don’t see significant increases to costs or reduction in service quality. Although G4S and Brink’s did not compete in many major markets, Brink’s may look to revise pricing arrangements to recoup the cost of the transactions – particularly in the Netherlands, where Brink’s will be the only major CIT provider.
"Cash volumes are decreasing; the retail cost of cash per dollar/pound/euro is increasing. This is Brink's’ 14th purchase in recent years, reflecting rapid consolidation in the global CIT industry. Competition between businesses & payment types is so important for cost, innovation, and quality, as it forces everyone to improve. When we see competition reducing, it’s always the merchant that loses out."
Alex Ellwood - Head of Marketing & Insights