FirstGroup, Britain’s biggest train operator, is evaluating a £1.2bn takeover offer from a US private equity firm, the latest UK transport group to become a takeover target.
The Aberdeen-based bus and rail operator said it had received a series of unsolicited proposals from I Squared Capital, and rejected them unanimously, apart from the latest approach, received on Wednesday evening, which it is evaluating.
The private equity firm is offering to pay 118p per share in cash and “a contingent right to up to a further 45.6p per share” based on the outcome of payouts to the company after the sale of its US transit business and net proceeds from the Greyhound sale last year. FirstGroup decided to pull out of the North American market and focus on the UK.
The global infrastructure firm I Squared Capital, which has offices in London, Hong Kong, Miami, Singapore and Delhi, focuses on energy, utilities, telecom and transport in the Americas, Europe and Asia.
FirstGroup shares jumped as much as 15% to 138p, hitting levels not seen since 2019 and later traded 8.3% higher at 129p.
Along with other transport companies, FirstGroup was hit by the slump in bus and rail passenger numbers during the Covid pandemic, when non-essential travel was banned during lockdowns. Demand has been slow to recover.
FirstGroup employs 17,500 people and runs four of the UK’s rail networks under franchises awarded by the government: Great Western Railway, South Western Railway, TransPennine Express and Avanti West Coast. It also runs Hull Trains and Lumo on the east coast between London and Edinburgh, two “open access” operations that run trains on a commercial basis without franchises.
The company is also the second-biggest bus operator in the UK, running services in cities such as Glasgow, Bristol and Leeds.
Last year the company was embroiled in a long battle with an activist investor, the New York hedge fund Coast Capital, which forced out the chief executive, Matthew Gregory, in July.
StageCoach, the UK’s biggest bus and coach operator, has backed a £595m offer from a pan-European infrastructure fund managed by Germany’s DWS Infrastructure. It trumped a £1.9bn merger previously agreed with its rival National Express.
