Private equity firm turns cool on First

● Bus and rail firm says the proposals ‘fundamentally’ undervalued group

“The board of Firstgroup continues to believe in the strong prospects for shareholder value creation available to the company. Firstgroup will publish its full-year results for the year to 31 March on 31 May and will update the market on the company’s outlook at that time.”

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”.

He added: “We expect management to come under greater pressure to find alternative ways to crystallise value besides its current organic turnaround strategy.”

Joe Spooner, an analyst at Jefferies, said: “Investors may hope that this experience may inject new impetus into recovery efforts at Firstgroup.

“But our sense is that there’s no quick fix and developments within UK Rail remain our immediate concern.”

In its February update, the transport group noted that its First Bus operation had made “encouraging margin progress” as it benefited from cost efficiency actions and revenue growth. Its First Rail franchise portfolio continued to generate value despite “infrastructure challenges”.