FirstGroup rejects Apollo takeover approach

FirstGroup chief executive Tim O’Toole

UPDATE 3 — Aberdeen-based bus and rail giant FirstGroup plc said late on Wednesday it has received “a preliminary and highly conditional indicative proposal from Apollo Management IX L.P. relating to a possible cash offer” for FirstGroup.

FirstGroup said it believes the approach “fundamentally undervalues the company and is opportunistic in nature” and that its board “has unanimously rejected the proposal.”

Apollo Management IX L.P is a unit of buyout group Apollo Global Management.

Shares in FirstGroup, which among other businesses operates trains in the UK and yellow school buses and Greyhound buses in the United States, closed up 7.4% on Wednesday at around 102p, giving it a current stock market value of around £1.2 billion.

FirstGroup shares have fallen around 25% in the past year.

Under the City Code on Takeovers and Mergers, Apollo must announce a firm intention to make an offer for FirstGroup by 5pm on May 9 or walk away.

FirstGroup added: “There can be no certainty that any firm offer will be made nor as to the terms on which any firm offer might be made.”

The full FirstGroup statement read: “The board of FirstGroup plc notes the recent movement in FirstGroup share price and confirms that it has received a preliminary and highly conditional indicative proposal from Apollo Management IX L.P. relating to a possible cash offer for the entire issued and to be issued ordinary share capital of FirstGroup.

“The board of FirstGroup has considered the proposal in detail and believes that it fundamentally undervalues the company and is opportunistic in nature.

“Accordingly, the board of FirstGroup has unanimously rejected the proposal.

“There can be no certainty that any firm offer will be made nor as to the terms on which any firm offer might be made.

“A further announcement will be made in due course if and when appropriate.

“In accordance with Rule 2.6(a) of the City Code on Takeovers and Mergers, Apollo must, by not later than 5.00 p.m. on 9 May 2018, either announce a firm intention to make an offer for the Company in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies.

“This deadline will only be extended with the consent of the Takeover Panel in accordance with Rule 2.6(c) of the Code.

“This announcement has been made by FirstGroup without the agreement or approval of Apollo.”

In the year to March 31, 2017, FirstGroup revenue rose 8.3% to £5.65 billion and profit before tax rose 23% to £207 million.

FirstGroup makes more than half of its revenues in the US.