LONDON (Reuters Breakingviews) - G4S’s long-suffering shareholders’ luck has changed. The UK security group has gone from making headlines for running chaotic prisons or defrauding taxpayers to being the subject of a fierce bidding war between transatlantic rivals GardaWorld and Allied Universal. While the latter has now won the board’s backing for its 3.8 billion pound offer, the fight probably has more rounds to go. On Tuesday California-based Allied Universal unveiled a 245 pence per share offer, some 4% above last week’s proposal from GardaWorld, which kicked off the process with a hostile bid in September. Given the Canadian group’s Chief Executive Stephan Cretier has said G4S is his preferred merger candidate, a revanche is likely. The fact that the UK group has now opened its books to both bidders may help him justify a higher price. The problem for Cretier is that there’s likely more fight left in Allied Universal too. Both bidders are backed by private equity groups, and hungry to expand. Worse, the Californian rival may be willing to pay more: it might be able to extract more synergies from a merger than GardaWorld as it has a larger business in North America, where G4S is also active. The two rivals can afford to pay more. Analysts expect G4S to generate 440 million pounds of operating profit in 2021, according to Refinitiv data. Assuming synergies of around 4% of revenue, in line with recent transactions in the sector, a buyer could generate a return on capital of around 10% from the latest 245 pence per share price, which values G4S at 5.4 billion pounds including debt, a Breakingviews calculation shows. The target’s cost of capital is probably around 8.5%, according to Redburn analysts. In theory, the bidders could pay more than 280 pence per share before destroying value. It may not come to that. Given G4S troubled history, GardaWorld and Allied Universal may be wary of overpaying. Still, with the UK group’s shares now trading at 256 pence, the market is already expecting at least one more offer. Allied’s 245 pence bid is equivalent to a fat 68% premium to the undisturbed price in September. After years of poor performance, G4S’s shareholders have finally entered the cash vault.