Home Private Equity FirstGroup considers £1.2bn PE takeover

FirstGroup considers £1.2bn PE takeover


Aberdeen-based transport operator FirstGroup has said it is evaluating a bid from the US private equity firm I Squared that values its shares at up to £1.23bn.

The FTSE 250 train-and-bus operator revealed that it had previously turned down a number of earlier “unsolicited and conditional takeover proposals” from I Squared Capital Advisors (UK) LLP.

I Squared’s latest proposal is for 118 pence a share and up to a further 45.6 pence based on potential extra sums from the £3.3bn sale last year of First Transit, its US city and school bus operations, and of the £125m sale of Greyhound, its US intercity bus business.

The sales were made after FirstGroup decided, following the slump in bus and rail journeys during the Covid pandemic and subsequent slow recovery in demand, to focus on the UK and withdraw from the North American transport market.

Based on the total potential price of 163.6 pence, the company, the UK’s largest train operator, would be valued at £1.23bn: a premium of 37% compared with FirstGroup’s closing price of 119.40 pence last Wednesday.

FirstGroup, which is also the second largest bus operator in the UK outside London, employs 17,500 in the UK and is the principal shareholder in four of Britain’s government rail franchises: Great Western, South Western, TransPennine Express and the Avanti West Coast mainline route.

The transport group also operates the open-access routes Hull Trains and the Lumo budget rail service between London and Edinburgh.

Along with Trenitalia, FirstGroup will also operate the UK’s HS2 high-speed train line, currently under construction.

I Squared, which focuses on energy, utilities, telecoms and transport across the Americas, Europe and Asia, has until June 23 to either make a formal offer for FirstGroup or walk away under UK Takeover Panel rules.

To contact the author of this story with feedback or news, email Mark Latham

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