SoftBank Weighs Allied Universal Deal Valued at About $18 Billion, Bloomberg Reports

SoftBank Group is considering an acquisition of Allied Universal, the U.S. security services company, in a deal that could value it at about $18 billion, Bloomberg News reported Friday, Oct. 16, citing people familiar with the matter.

The talks are preliminary. According to the report, no final decisions have been made, including on price. SoftBank declined to comment. Allied Universal did not immediately respond to a Reuters request for comment.

The numbers

The $18 billion figure is equity value. Allied also carries roughly $12 billion in publicly traded debt, which would put total transaction value close to $30 billion if the deal followed that path, according to details attributed to people familiar with the talks.

Allied was formed in 2016 from the merger of AlliedBarton and Universal Services of America. It roughly doubled in scale in 2021 by acquiring British rival G4S, a deal reported at $5.1 billion by ValueAdd VC and about $5.3 billion by BigGo Finance. It now employs about 800,000 people worldwide and is the largest private security guard provider in the world, with annual revenue above $18 billion.

Its backers include Warburg Pincus, Canada's CDPQ, Partners Group and J. Safra Group. Any transaction would presumably need their buy-in, and none of them has said anything publicly about a sale.

Why a security guard company

According to Bloomberg's sources, the logic runs through Masayoshi Son's growing focus on AI. Son is exploring AI-powered robots across industries and wants to strengthen the infrastructure that technology needs.

One person told Bloomberg that SoftBank would look to eventually replace some Allied staff with robots for certain security tasks. Another said humanoid security workers would take longer to arrive.

Allied also has a growing business supporting the development and operation of data centers, the facilities that AI runs on. Its other work includes security for large venues and events and for government clients such as New York City's subway system and the U.S. Department of Homeland Security.

In practical terms, SoftBank would own the customer. Instead of selling robots to security firms, it would run the security firm and use its sites as a testing ground.

SoftBank's spending spree

This would stack on top of other large commitments. SoftBank completed the final phase of its planned $30 billion investment in OpenAI this month. It agreed last year to buy ABB's robotics business for $5.4 billion. It also owns a majority stake in Arm and runs the Vision Fund, which was an early backer of Alibaba and a major backer of WeWork.

Crypto Briefing reported that SoftBank's U.S.-traded depositary receipts, ticker SFTBY, fell roughly 9.5% to 10% on Friday after news of the talks surfaced. SoftBank has not commented on the report or on the share move.

The skeptical read

ValueAdd VC's analysis of the report makes the case against. It argues that buying a labor-intensive services company is a different bet than buying chips or model access. In its words, SoftBank would be "effectively paying today for headcount it plans to shrink over years."

The same analysis notes that Allied competes in a thin-margin industry against firms such as Securitas and Prosegur. It says SoftBank's balance sheet is already stretched by the OpenAI round, the ABB purchase and its Vision Fund exposure, which raises the question of whether a deal would be funded from existing capital, a new vehicle or asset sales. It also points out that SoftBank's past pursuits have sometimes been resized or abandoned before signing.

The analysis says the test would be whether SoftBank can show a credible robot-for-human substitution timeline across the lower-margin contracts that make up most of Allied's revenue, not just at flagship client sites.

What comes next

Nothing is signed, and no price is set. Allied's private equity and pension fund owners would presumably have to agree to any sale, and none has said where it stands. SoftBank has not said how it would fund a purchase, or whether it would take on Allied's debt.

What happens to Allied's workforce is the open question. The reported plan is to replace some guards with robots over time, and no one has said how many jobs, or on what schedule.