Aberdeen-based bus and rail giant FirstGroup said on Thursday the Takeover Panel has granted it a four-week extension to allow discussions to continue with US private equity group I Squared Capital Advisors (UK) LLP.

On June 9, FirstGroup said its board has unanimously rejected a £1.23 billion cash and shares takeover approach from I Squared Capital Advisors.

The approach valued FirstGroup at up to 163.6p per share. FirstGroup shares are trading around 137p.

FirstGroup said on June 9 the cash component in the I Squared approach of 118p per FirstGroup share “significantly undervalues FirstGroup’s continuing operations and its future prospects” and the contingent right to up to 45.6p per FirstGroup share “does not provide shareholders with sufficient certainty.”

FirstGroup is the UK’s biggest train operator as the main shareholder in four UK rail franchises: Great Western Railway, South Western Railway, TransPennine Express and Avanti West Coast.

The firm is also the UK’s second-biggest operator of regional buses, serving two-thirds of the UK’s 15 largest conurbations including Glasgow, Bristol and Leeds.

On Thursday, FirstGroup said in a stock exchange statement: “In order to allow discussions with I Squared to continue, the board of FirstGroup has requested that the Panel on Takeovers and Mergers extend the PUSU Deadline in accordance with Rule 2.6(c) of the Code.

“In light of this request, an extension has been granted by the Panel and in accordance with Rule 2.6(a) of the Code, I Squared is required, by not later than 5.00 p.m. on 21 July 2022, either to announce a firm intention to make an offer for the company in accordance with Rule 2.7 of the Code or to announce that it does not intend to make an offer for the company …

“There can be no certainty either that an offer will be made nor as to the terms of any offer, if made.”