(Sharecast News) - RBC Capital Markets has called GardaWorld's latest £3.7bn offer for G4S fair, as it downgraded its rating on the outsourcing giant.
The Canadian security services firm made its 235p-a-share final offer on Wednesday, after its initial hostile approach of 190p was rejected.
RBC said it viewed the increased offer as fair, and that it would now be looking to lock in some profits.
Analyst Andrew Brooke said: "While we cannot rule out a competing bid from Allied, we would not expect it to be materially higher than the current share price.
"We thus see risk reward as more fairly balanced, and move down to 'sector perform', increasing our price target to 235p. We would be locking in some profit here."
Previously, RBC had a rating of 'outperform' on the blue chip and a price target of 215p.
G4S called GardaWorld's initial approach "highly opportunistic". Shortly afterwards, US rival Allied Universal Security Services made its own 210p-per-share offer, which was also rejected, for "significantly" undervaluing the company.
The latest offer from GardaWorld includes a £770m support package for the pension and reduces acceptance terms to 50% plus one share from 90%. G4S is currently evaluating the latest approach.
Allied has until 9 December to make a competing offer.
"Our view is that Allied needs a deal less that GardaWorld and is unlikely to have much interest in the cash solutions businesses, but would likely have greater synergies given the US overlap," said Brooke. "Net-net, we see the potential for a higher bid, but would be surprised if it were north of 250p, versus the current share price of 246p."
He continued: "We see the [GardaWorld] valuation as fair and while Allied may come in, we wouldn't expect a big materially higher than the current share price.
"If G4S survives as standalone, which we see as increasingly unlikely, management credibility remains an issue and, in our view, the business needs to be focused further."
As at 1200 GMT, shares in the FTSE 250 firm were largely flat at 245.3p.
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