Go-Ahead shares soar after revealing takeover bids

Shares in Go-Ahead rose by nearly a fifth after the UK-listed public transport company said it had received two takeover bids, becoming the latest target in a sector that has attracted interest from international investors.

The Newcastle-based business revealed on Monday that it had received approaches from Australian transport company Kelsian Group, as well as one from a consortium made up of bus operator Kinetic Holding and Spain’s Globalvia Inversiones.

Both Kelsian and the consortium submitted revised proposals, Go-Ahead said, after the UK transport group evaluated their initial approaches.

The new proposals were “both at a level which, should a firm offer be made, the board of Go-Ahead would be minded to recommend to shareholders”, the company added, without disclosing the terms.

The UK’s listed public transport companies have become the targets of a wave of takeover interest this year, after emerging from the disruption of the pandemic.

Last week FirstGroup, which runs UK rail and bus services, rejected a £1.23bn takeover bid from I Squared Capital, a private equity group that focuses on global infrastructure investments.

Bus, coach and tram operator Stagecoach has, meanwhile, agreed to a £595mn cash bid from German asset manager DWS, which scuppered a separate takeover offer by National Express.

Go-Ahead’s chief executive Christian Schreyer told the Financial Times in April that public transport companies had benefited from “megatrends” in public policy that left them attractive to outside investors, notably the drive to cut car use.

Governments including in the UK had also shifted to offering companies longer-term contracts when tendering bus and rail operations, Schreyer said.

“Long-term stable contracts, that’s what infrastructure funds are interested in, they have a long-term investment horizon . . . if you have the right risk approach and you do your processes well then it is a stable, long-term business.”

The takeover interest comes after a calamitous period for Go-Ahead, which last year was fined £23.5mn by the UK government and stripped of its Southeastern rail franchise after failing to declare tens of millions of pounds of taxpayer funding that should have been returned.

Go-Ahead was forced to delay its results and had its shares suspended from the London Stock Exchange between January and late February.

Schreyer, who joined in November, has since overhauled its corporate governance and brought in a new management team.

He also sought to draw a line under the disruption and win back investor confidence in April when he announced plans to pay a dividend for the first time since 2019, and set out new financial targets.

Shares in Go-Ahead surged 19 per cent in early London trading on Monday. They have more than doubled this year.