The board of Go-Ahead Group has agreed a takeover approach that would value the company at nearly £650m - but there could yet be a bidding war for the Newcastle firm.
The bus and rail operator revealed on Monday that it had received two takeover approaches which it said it would “be minded to” accept.
Now it has revealed it has reached an agreement with a consortium made up of Australian bus operator Kinetic and Spanish transport infrastructure company Globalvia to buy all of the shares in the company at 1,500 pence each. That would value the firm at £647.7m.
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But fellow Australian transport firm Kelsian - which has also made an initial takeover approach - has released a statement urging Go-Ahead shareholders not to accept any bid as it finalises its potential offer.
The takeover interest comes after a challenging period for Go-Ahead, in which it received a £23.5m fine over a breach of a rail franchise around London.
But there has been growing interest in the UK transport sector as investors bank on the industry’s continued recovery following the impact of the pandemic.
Go-Ahead released a statement on Monday night saying it reached agreement on an offer from the Kentic and Globavia bidco to pay Go-Ahead shareholders 1,450p per share plus a special dividend of 50p per share.
That offer was a premium of almost 50% on Go-Ahead’s share price on May 25, though shares are currently trading above 1,500p, suggesting the market expects a higher final bid for the firm.
Go-Ahead said it expects to complete the deal in October, though a full timetable of the takeover process is still to be published.
Christian Schreyer, group chief executive of Go-Ahead, said: “This is a compelling offer which combines an attractive valuation for shareholders with bright prospects for Go-Ahead’s operations and colleagues around the world.
“We have confidence in Go-Ahead’s future as an independent business, but see that being part of a truly global mass transit platform will yield exciting opportunities. We welcome the commitment of Kinetic and Globalvia to invest in the decarbonisation and digitalisation of our operations, and to support our strategy, The Next Billion Journeys.
“As a standalone business within a global platform, we will be better placed than ever to connect communities and to fulfil our purpose of moving our customers towards a smarter and healthier planet.”
Michael Sewards, Co-CEO of Kinetic, said: “We are delighted that the board of Go-Ahead has unanimously recommended our offer to shareholders. As Australia and New Zealand’s largest and fastest growing bus operator, with the majority of our revenue aligned to long-term government contracts, we will bring proven experience to accelerate the delivery of Go-Ahead’s Next Billion Journeys growth strategy.
“We are one of world’s largest operators of electric buses and we will not only provide the necessary long term capital but the expertise to facilitate the rapid transition of Go-Ahead’s bus fleet from diesel to zero emission technology.”
Javier Pérez Fortea, CEO of Globalvia, said: “As a leader in the management of transport infrastructure concessions, specialising in railways, we believe we can add real value in helping Go-Ahead become a leading global, multi-modal, mass transit platform.
“With operations around the world, our experience will help Go-Ahead grow in existing and new geographies while remaining a standalone UK business. Along with Kinetic we have a long-term approach and we are culturally aligned sharing a common mission based on delivering value for our customers.”
Potential bidder Kelsian has released a statement confirming it is still in discussions in taking over Go-Ahead, though that “does not amount to an announcement of a firm intention to make an offer".
The company said: “Kelsian believes that the potential combination with Go-Ahead would create an international leader in multi-modal, mass transit supporting a sustainability agenda for its passengers and governments, with strong growth prospects.
“Kelsian believes that, if an offer is made by Kelsian, it could bring to bear its expertise across safety, operational efficiency, digital, decarbonisation, and experience operating in the UK to enhance and accelerate the growth of Go-Ahead creating substantial value for Kelsian shareholders as well as benefiting wider stakeholders including passengers, governments and employees. Kelsian continues to carefully assess the opportunity with a disciplined focus on the strategic and financial rationale.
“Kelsian therefore urges Go-Ahead shareholders to take no action at this time.”
Shares in Go-Ahead, which had been trading as low as 545p in March, have risen again in early trading and currently stand at 1,540p.
