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Australian bidder walks away from £650m race to snap up rail giant Go-Ahead

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Go-Ahead Group, the UK's largest rail operator, could be up for sale as part of a wider sell-off being explored by the Canadian pension fund OPTrust.
The news comes just over a year and a half after the UK-listed transport giant was taken private in a £650m deal backed by a number of international pension funds, including OPTrust.

Australia-based Kelsian confirmed this morning it has pulled out from the race to buy Go-Ahead – weeks after the board picked a rival offer.

The business said falling share prices in Australia tied its hands and forced the group to walk away from a potential tie-up.

Kelsian is one of Australia’s biggest bus and ferry companies; it also has operations in Singapore and London.

It tried to muscle in on a deal to buy Go-Ahead, which co-runs the Govia Thameslink Railway, but its shares have fallen by more than 15% in recent weeks.

“Unfortunately, recent Australian equity markets have been volatile and external events have adversely impacted the Kelsian share price since 14 June 2022 when Kelsian first announced it was considering a possible offer for Go-Ahead,” Kelsian said.

“The Kelsian board consider that Australian equity market conditions at this time do not enable Kelsian to pursue a possible transaction for Go-Ahead despite the long-term strategic and economic rationale of the potential transaction for Kelsian.”

If Kelsian made an actual offer for Go-Ahead, it would have gone up against a deal already agreed between the company’s board and a consortium of investors.

The day before Kelsian announced it was thinking of a bid for Go-Ahead, the board said it had reached an agreement with its Australian rival Kinetic and Spain’s Globalvia.

£650m deal

The £650 million deal will pay shareholders £15 for each share they own in the company.

Shares dropped 3% on Thursday, following the announcement, to around 16p below the offer price.

Go-Ahead said it plans to go ahead with the Kinetic and Globalvia deal.

Earlier this month, the bidders said they do not expect to reduce Go-Ahead’s headcount when they take over the business.

But there will be a “limited” impact on the staff employed to support Go-Ahead’s listing on the London Stock Exchange.

The consortium is not expecting any depot closures or changes to staff employment conditions.

The buyers plan to review Go-Ahead’s rail businesses in Norway and Germany, which could see those parts of the business being sold.