Firstgroup ponders £1.2bn takeover bid

FIRSTGROUP, Britain’s biggest train operator, is considering a £1.2bn takeover bid by a US private equity firm as it braces for a summer of strike action by railway workers.

In a disclosure made in response to swings in its share price, the FTSE 250 transport company said it previously rejected “a series of unsolicited, conditional proposals” from I Squared.

Firstgroup said it was now considering the latest offer of 118p per share in cash up front, in addition to a potential 45.6p per share based on how much it will make from the sale of its US divisions Greyhound and First Transit. Shareholders would receive £885m and £340m respectively.

Shares in Firstgroup closed at 119p per share on Wednesday, before it received the latest bid, valuing the company at £972m. Shares jumped nearly 9pc to 129p yesterday.

Jefferies analyst Becky Lane said the I Squared bid “reflects international confidence in the UK public transport landscape”.

Firstgroup sold First Transit and First Student, famous for their yellow school buses, to EQT Infrastructure for £3.3bn last year.

It was followed by the disposal of its troubled Greyhound coach arm to Germany’s Flixmobility.

The Aberdeen-based company has since focused on its operations in Britain, including buses in Manchester, Leeds and Leicester.

It also runs Avanti West Coast with Italy’s Trenitalia and South Western Railway in a partnership with MTR of Hong Kong. Firstgroup and Trenitalia have also been selected to provide services on the HS2 high speed line from London to Manchester via Birmingham once it opens.

It comes as Firstgroup braces for disruption after railway workers voted in favour of the biggest strike action in decades.