£134m for tycoon circling rail giant
Huge pay of private equity chief bidding for First Group
THE private equity chief battling to buy Great Western Railway owner First Group was paid £134m last year.
American businessman Leon Black, 66, is pursuing the Aberdeen-based rail-and-bus operator through Apollo Global Management, which he set up in New York in 1990.
His windfall last year was boosted by dividends and took his earnings in the past three years to £316.5m, cementing his position as one of the world’s best-paid bosses.
Black, who is worth an estimated £4.4bn, has acquired a portfolio which includes Norwegian Cruise Line, whirlpool brand Jacuzzi and Caesars Entertainment, owner of Caesars Palace.The married father of four (pictured below) has a keen interest in art and has spent millions on pieces by Raphael and Picasso. In 2012 he bought one of four versions of Edvard Munch’s The Scream for £84m – the highest price paid for a work of art at that time.
But he faces a fight to take control of First Group, which also owns the Transpennine Express and South Western Railway as well as Greyhound buses.
Rejecting Black’s approach this week, First Group said it ‘fundamentally undervalues the company and is opportunistic in nature’.
The approach has also raised concerns over insider trading. The Financial Conduct Authority, the City watchdog, said it will look at an unusual spike in First Group’s share price in the days leading up to the announcement that it had rejected Apollo’s bid. Shares surged 32pc between March 26 and Wednesday when First Group made the approach public. Yesterday they closed up 2pc, or 2.3p, at 112.4p. There are also worries a takeover from the likes of Apollo would threaten the retirement incomes of its 50,000 former and current workers in light of recent scandals at BHS and British Steel. First Group, which started life in 1986 as Grampian Regional Transport in Aberdeen, has more than £4bn of pension liabilities on its books, compared to its market value of £1.2bn.
Black’s interest in First Group comes despite Labour’s pledge to renationalise the railways if it wins power, and it has sparked fears the operator could be broken up, with its UK division sold into foreign ownership.
Luke Hildyard, director of the High Pay Centre, said: ‘First Group is responsible for thousands of jobs and critical transport services. A takeover and subsequent dismantlement by American speculators in pursuit of a fast buck would be a kick in the teeth for workers and passengers.
‘This will be a test of whether or not the UK’s approach to business ownership and corporate governance works for the interest of the country as a whole or a handful of shareholders.’
Mick Cash, general secretary of rail union RMT, said: ‘This looks like another bunch of speculators and asset strippers homing in on the British transport sector.’
Apollo Global Management has until 5pm on May 9 to make a firm offer for the business.