Go-Ahead shares surge after bus operator receives two takeover approaches

Go-Ahead has seen its stock price surge after receiving two takeover approaches, which it said it was inclined to accept.

The bus operator is the latest transport firm to be courted by international investors.  

Fellow coach company Stagecoach was snatched by German asset manager DWS Infrastructure in May while last week public transport titan First Group rejected a £1.2bn bid from US private equity I Squared.

Shares in the Go-Ahead firm initially spiked as much as 20 per cent on Monday morning, but later plateaued to around 14 per cent.

The transport operator said it had received separate unsolicited, conditional approaches from the Australian tour operator Kelsian and a consortium made up of another Australian bus operator Kinetic and transport infrastructure firm Globalvia.

After evaluating both approaches with the firm’s financial adviser Rothschild & Co, Go-Ahead’s board responded to the respective approaches.

The two parties then each submitted a series of revised proposals.

The most recent proposals from each firm are both at a level that, in the event of a firm bid being made, the board would “be minded” to recommend the offer to shareholders.

Commenting on the news, Jefferies’ equity research senior vice president Becky Lane said: “Confirmation of multiple approach for Go-Ahead, following recent events with Stagecoach and First Group, shows ongoing private demand for transport assets.

“We think this reflects structural industry growth due to a modal shift to public transport.”

Under takeover rules, both the consortium and Kelsian will need to if they want to go for the company by 5pm on 11 July.

Over the last few months, Go-Ahead had been under scrutiny for a series of financial irregularities, including being forced to pay a £23.5m fine after it was stripped of its Southeastern franchise for concealing £25m of taxpayer’s money related to HS1.

The group recovered from the challenging period in April when it announced it would reinstate pre-Covid dividends to shareholders.

The board recommended Go-Ahead gives back between 50 and 75 per cent of underlying earnings per share, after saying it was targeting an annual group revenue of around £4bn and an operating profit of £150m for the mid-term.