FirstGroup considers £1.2bn takeover bid from private equity I Squared
Transport giant FirstGroup has announced it was considering a £1.2bn takeover bid from US private equity I Squared.
FirstGroup told investors it was currently considering a 118p per share cash offer after receiving the firm’s latest unsolicited bid yesterday.
“The board of FirstGroup notes the recent share price movement,” the group said in a note to investors.
“The company has received a series of unsolicited, conditional proposals from I Squared Capital Advisors.”
The group’s board said I Squared’s bid would also include an additional 45.6p per share.
The additional capital was based on the outcome of FirstGroup’s divestment from US transport firm First Transit as well as the proceeds from Greyhound’s sale.
The deal’s total worth would amount to £1.2bn, with £885m up-front and an additional £340m derived from First Transit and Greyhound’s sales.
FirstGroup earned £125m from selling Greyhound in October last year, while it could make up to £170m from First Transit’s 2021 sale.
The transport company signed an earn-out clause with new owner EQT which established future returns based on First Transit’s performance under the new ownership.
Following the announcement, FirstGroup’s share jumped 15 per cent to a three years’ high of 138p, later stabilising to 129.30p.
The news comes 10 days after new boss Graham Sutherland assumed office.
Sutherland, who was previously at the helm of telecoms company KCOM, succeeded Matthew Gregory as chief executive after he stepped down last year due to pressures from activist shareholder Coast Capital Management.
The takeover proposal comes a few months after rival Stagecoach was snatched from underneath National Express by German asset manager.
DWS’s £594.9m cash offer was declared unconditional on 20 May after shareholders accounting for 66 per cent of Stagecoach’s shares agreed to the takeover.
“We are delighted that our acceptance condition has now been satisfied and our Offer has now been declared unconditional,” said DWS’s head of infrastructure Hamish Mackenzie.
“Our offer provides immediate value for Stagecoach shareholders and paves the way for the Stagecoach team to deliver enhanced services for passengers and communities across the UK.”