FirstGroup rejects £1.23bn offer from private equity firm

FirstGroup has rejected a £1.23bn takeover bid from a private equity firm, saying that it “significantly undervalues” the UK transport company.

The FTSE 250 group confirmed last month that it had received a series of unsolicited, conditional proposals from I Squared Capital, a private equity firm that focuses on global infrastructure investments.

The bus and train operator said at the time that it was considering the offer, consisting of a cash component of 118p per share and a “contingent right” of up to 45.6p per share, based on potential payouts from the sale last year of its US transit and Greyhound bus businesses.

The full 163.6p-per-share offer would value Aberdeen-based FirstGroup’s equity at £1.23bn.

However, the board of FirstGroup said on Thursday that it had “unanimously rejected the proposal”.

The company said the board and its advisers “concluded that the cash component of 118p per FirstGroup share significantly undervalues FirstGroup’s continuing operations and its future prospects”.

It added that the contingent right component of 45.6p per share “does not provide shareholders with sufficient certainty”.