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Cash offer for Scottish group

FirstGroup rejects offer from US-based Apollo


Driven higher: Shares in the group soared in late trade

Rail and bus operator FirstGroup revealed last night that it has rejected a takeover bid from US private equity firm Apollo Management.

The Aberdeen-based FTSE-250 group disclosed the cash offer after the market closed and in response to a 7.4% jump in its share price in late trading on the London Stock Exchange.

The company, which has about 100,000 employees, runs the FirstBus network, Great Western Railway and America’s Greyhound bus services. It lost the ScotRail franchise in the last bidding round.

It is one of the largest bus operators in the UK, with a fifth of the market outside London, and the largest provider of student transport in North America.

In a statement issued at 6.30pm it said Apollo’s offer “fundamentally undervalues the company and is opportunistic in nature.

“Accordingly, the board of FirstGroup has unanimously rejected the proposal.”

It added that there can be no certainty that any firm offer will be made, nor as to the terms on which any firm offer might be made. A further announcement will be made in due course if and when appropriate.”

FirstGroup did not reveal any financial details about the offer which values the company at about £1.2 billion. It had revenues of £7.5bn last year.

Under the UK’s takeover code, Apollo has until 9 May to launch a formal bid. It has more than $200bn (£140bn) invested in finance, food and property. It owns the casino operation Caesars Entertainment Corporation.

Apollo’s approach a warning from FirstGroup in February of trading weakness due to strong competition in the US.

FirstGroup has also been targeted by Canadian activist investor West Face Capital, which disclosed a 5%stake in the business last June.

The UK company has not paid a dividend to shareholders since it raised £615m from a rights issue in 2013 to pay down debt, after it lost a contract to run Britain’s West Coast rail franchise.

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