FirstGroup shares tumble as suitor backs out of bid

Takeover: Apollo Management will not offer for transport firm

Scottish public transport giant FirstGroup saw its shares take a tumble yesterday after its private equity suitor walked away from a bid for the operator.

Shares in north-east-based FirstGroup – which runs a major rail and bus network in the UK and also owns the iconic Greyhound coach line in the US – plunged after Apollo Global Management said it did not intend to pursue its interest in the business.

Apollo had until tonight to make a firm offer for the business or walk away

In a statement to the London Stock Exchange, FirstGroup said it had received “two preliminary and highly conditional indicative proposals” from Apollo in recent weeks relating to a possible cash offer for the business.

“Having considered them in detail, the board of FirstGroup concluded that the proposals fundamentally undervalued the company,” it said.

“Accordingly, the board of FirstGroup unanimously rejected the proposals.

“The board of FirstGroup continues to believe in the strong prospects for shareholder value creation available to the company.

Apollo’s interest in FirstGroup was opposed by the RMT union and the Labour Party.

But the firm has come under pressure over its performance and structure, with activist investor West Face Capital raising concerns the stock is undervalued and pressing for operational changes.

While investors showed their disappointment as hopes of a takeover battle were dashed, transport analyst Gerald Khoo, at Liberum, said the approach “highlighted the potential value that lies within FirstGroup”.

Shares in FirstGroup closed the session down – 12.16% at 97.50 last night.