The board of Aberdeen-based transport giant FirstGroup is mulling a potential £1.2 billion-plus takeover approach by an international private-equity house.
I Squared Capital Advisors, operating from offices in London, Hong Kong, Singapore, New Delhi and Miami has made previous approaches, all of which have been rebuffed.
It has now proposed a £1.18 per share cash deal, with shareholders potentially receiving a further 45.6p for each unit held.
The latter payment is dependent on the outcome of an “earnout” linked to the sale of FirstGroup’s FirstTransit subsidiary in North America, as well as net proceeds realised from “legacy assets and liabilities” of the transport group’s former Greyhound business.
I Squared’s proposal is, therefore, potentially worth 163.p per share.
Shares surge on latest approach
FirstGroup has about 750 million shares in circulation. The interest from I Squared fuelled a near-9% rise in the value of the stock today, before the shares fell back to 126.44p, up 5.9%, at the market close.
Announcing the latest takeover approach, FirstGroup said: “The company has received a series of unsolicited, conditional proposals from I Squared Capital Advisors (UK) LLP in relation to a possible offer to acquire the entire issued, and to be issued, share capital of the company.
“The board together with its advisers, is currently evaluating the latest approach, received yesterday evening.
“The previous approaches were all unanimously rejected by the board.”
Clock ticking for FirstGroup suitor
FirstGroup urged shareholders to take no action in relation to the latest approach from I Squared, adding: “A further announcement will be made if and when appropriate.”
Under City takeover rules, I Squared has until 5pm on June 23 to “put up or shut up” – to either announce a firm intention to make an offer for FirstGroup or walk away.
FirstGroup announced last July it had completed the sale of North American businesses First Student and First Transit.
The two businesses were acquired by Swedish private equity group EQT Infrastructure in a deal worth £3.3bn.
In October, FirstGroup said it had sold Greyhound – the iconic coach business connecting cities across North America – drawing its ownership to a close after 14 years.
The £125 million sale to Germany’s FlixMobility more than two years after the division was put up for sale ended FirstGroup’s interests across the Atlantic, leaving it to focus on its UK bus and train operations.
I Squared’s latest attempt to bolster its global infrastructure investments, comes just a few months after FirstGroup unveiled Graham Sutherland as its new chief executive.
Mr Sutherland, who previously held a number of leadership roles in the telecommunications sector, started his new job earlier this month.
Former chief executive Matthew Gregory announced his departure last June after he and the rest of the board faced criticism from the country’s largest shareholder, US hedge fund Coast Capital.
Coast and other investors were unhappy over the sale of First Student and First Transit, claiming the deal left them short-changed.
FirstGroup is the second-largest regional bus operator in the UK, carrying hundreds of thousands of passengers a day.
Its First Bus division serves two-thirds of the UK’s 15 largest conurbations, including major urban areas such as Aberdeen, Glasgow, Bristol and Leeds, with one-fifth of the market outside London.
First Rail is the UK’s largest rail operator, with many years of experience running all types of passenger services. The division has four UK Government-contracted operations – Avanti, GWR, SWR, TPE – and also runs two open-access operations, Hull Trains and Lumo.
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