SoftBank in talks to buy US security group Allied Universal

SoftBank is in talks to buy Allied Universal, the world’s largest private security group and owner of the UK’s G4S, as Masayoshi Son looks to accelerate his already sprawling bet on robotics and AI.

The potential deal for Allied could value the security company at close to $30bn, including debt, according to multiple people familiar with the matter. However, talks are still at an early stage and there was no guarantee that an agreement would be reached, they added.

A successful acquisition would allow Son to build up his growing bet on robotics. That includes the $5.4bn agreement to buy ABB Robotics — which is pending regulatory approval in China — as well as the planned listing of physical AI company Roze in the US.

Son has become increasingly interested in humanoid robots as part of his belief in the future of AI. He has long discussed with his advisers the idea of using autonomous robots to provide security services. Allied also provides security for data centres, another growing part of the SoftBank empire.

Allied, which is backed by private equity firms including Warburg Pincus and Canadian pension fund La Caisse, says it operates in more than 100 countries and employs close to 770,000 people.

It has been considering an initial public offering for several years, a possibility its chief executive Steve Jones has discussed publicly.

Warburg has been invested in Allied since 2016 before upping its investment three years later when La Caisse bought into the company. Collectively the pair own more than two-thirds of the company. Allied bought UK-based security group G4S in a $5.3bn deal in 2021.

Warburg, La Caisse and SoftBank declined to comment. Allied did not respond to a request for comment. The news of the potential deal was first reported by Bloomberg.

A potential sale of Allied would mark a mammoth private equity exit when many financial sponsors are struggling to offload long-held investments.

Warburg has sold some of the biggest investments in its portfolio in recent months, including the sale of turbine parts manufacturer Consolidated Precision Products to GE Aerospace for $11.75bn and a majority stake in Ensemble Health Partners, valuing the healthcare technology group at $12bn.

Underpinning his plans for AI and robotics is SoftBank’s ownership of UK chip company Arm and the $65bn that Son has invested in OpenAI. Son’s investment in OpenAI has faced fresh uncertainty after the ChatGPT maker delayed plans for a stock market listing amid concerns about the risks and costs of developing increasingly powerful AI systems.

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That delay could also hurt SoftBank’s plans for new investments in AI, with some investors questioning the rationale of further large-scale deals.

The company’s financing costs are already rising — last month it completed the largest junk bond offering on record, paying investors yields as high as 9.75 per cent, signalling the price of Son’s extreme ambition.

However, senior figures at SoftBank point to the group’s strong balance sheet as evidence that the company can finance Son’s plans for new acquisitions and investments.

In the search for more firepower, Son is also seeking to raise up to $100bn, including from Gulf investors, with the aim of creating a fund to buy whole companies that can be overhauled using AI. One of the people familiar with the matter suggested that such a fund would see Allied as a potential target.

SoftBank’s share price has fallen by close to 40 per cent since a peak in June but is still up 7 per cent so far this year. Japan’s benchmark Nikkei 225 index is up 26 per cent over the same period.