Latest Rail News

09.05.18

FirstGroup shares crash as Apollo walks away from merger without deal

A potential deal between US private equity firm Apollo and British rail and bus operator FirstGroup has collapsed after two approaches were turned down by the UK transport giant.

FirstGroup shares fell by more than 10% on the London Stock Exchange yesterday when the news broke that the Aberdeen-based firm had failed to reach a deal with the equity firm.

Apollo had until 5pm today to make an offer or walk away from a deal, which would take control of FirstGroup-owned American Greyhound buses and UK rail franchises such as TransPennine Express, South Western Railway, Great Western Railway and First Hull Trains – as well as potentially including the new West Coast Partnership in the future.

But it has now been reported that the equity firm will not make a further bid, stating that “neither it nor the Apollo Funds intends to make an offer to acquire FirstGroup.”

In a statement, the FirstGroup board said: “In recent weeks the board of FirstGroup received two preliminary and highly conditional indicative proposals from Apollo relating to a possible cash offer for the entire issued and to be issued ordinary share capital of FirstGroup.”

But the transport operator explained that the board unanimously rejected the proposals, arguing that they “fundamentally undervalued the company.”

FirstGroup, whose profits were down 26% in the six months up to September in 2017, experienced a 25% increase in its stocks up in the days after rumours of the takeover – but since then stocks have tumbled.

It is set to publish its full-year results on 31 May.

Apollo has been approached for comment.

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