FirstGroup is evaluating a bid valuing its shares at up to £1.23bn after “a series of unsolicited, conditional proposals” from private equity group I Squared Capital.
The UK bus and train operator said on Thursday the offer consisted of a cash component of 118p per share and a “contingent right” of “up to a further 45.6p per share” based on the outcome of payouts due to the company following the sale last year of its US transit business and on the net assets of the Greyhound bus business, which was also sold last year.
The full 163.6p-per-share offer would value FirstGroup’s equity at £1.23bn.
FirstGroup said it was “currently evaluating” the latest offer, noting that “the previous approaches were all unanimously rejected by the board”.
Like other bus and train operators, FirstGroup has been grappling with the sudden decline in bus and rail traffic during the coronavirus pandemic and the subsequent slow recovery of demand.
The company last year fought a prolonged battle with activist investors who forced out chief executive Matthew Gregory in July last year.
The activists — led by New York-based Coast Capital Management — were unhappy at the £3.3bn the company received for its First Transit and First Student transit and school bus operations in the US.
The sale of the Greyhound operations in a complex deal for which the company received $172mn cash was announced in October.
Aberdeen-based FirstGroup, the UK’s biggest train operator, is the main shareholder in four UK rail franchises: Great Western Railway, South Western Railway, TransPennine Express and Avanti West Coast.
It also runs Hull Trains and Lumo, two “open access” operations that operate trains on a commercial basis without franchises. In addition, it is the second-biggest operator of regional buses, providing services in Glasgow, Bristol and Leeds.
The company’s shares were up more than 8 per cent at 129.5p in morning trading in London.
