Canada Connection: Garda World Security Corp.

Canadian Security firm Garda World Security Corporation (TSE: GW.TO) has become the unsung darling of so-called “special situations” analysts who watch Canada’s small-cap companies. Investors, on the other hand, appear to be more cautious.

Founded by Montrealer Stephan Cretier in 1995, Garda – which means “police” in Gaelic – has grown from a tiny operation to a sprawling empire in North America, Europe, Mexico and the Middle East, including Iraq for the past four years during reconstruction security.

Garda handles airport security – it has contracts for all of Canada’s major airports – as well as cash logistics, meaning security trucks, in addition to security consulting and pre-employment screening. “Garda was really small a few years ago,” noted one industry analyst, who asked not to be identified and who follows Garda. “But they dominate the Canadian market and making inroads in the U.S.”

With headquarters in downtown Montreal, Garda has grown large through acquisitions of its competitors. There were 12 such deals in 2006 and two so far this year, including the California cash handling company ATI Systems International for US$400 million. That includes ATI’s fleet of 179 airplanes, which it will re-lease because of U.S. restrictions on foreign ownership of airlines.

“Globally, that places Garda as the fifth-largest security services company (in the world), by revenue, with leading market positions in each of its divisions,” says Sara O’Brien, an analyst with RBC, the securities division of the Royal Bank of Canada.

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