UK-listed transport group Go-Ahead, which operates a number of routes across Dublin city, has accepted a £650 million (€757 million) takeover bid from an Australian bus operator backed by international pension funds, becoming the latest transport company to be taken private by foreign buyers.
The Newcastle-based business said on Monday that it would recommend shareholders accept a cash offer of £15 per share including a special dividend, a 24 per cent premium to its share price on Friday.
Go-Ahead operates 24 Dublin city bus routes, having taken them over from Dublin Bus in 2018. It also operates five commuter routes in Dublin, Kildare and Offaly. The company recently won a contract from the National Transport Authority to operate part of the BusConnects network.
It has been recruiting 180 staff in a move that will bring its Irish workforce to 800.
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Go-Ahead also operates bus and rail services in the UK, Singapore, Sweden, Norway and Germany.
The consortium is made up of Australian bus operator Kinetic Holding and Spain’s Globalvia Inversiones, which are both backed by Canadian pension manager OPTrust.
Globalvia Inversiones is a transport infrastructure manager specialising in roads and railways that also counts Dutch pension fund PGGM and the UK’s Universities Superannuation Scheme among its owners, while Kinetic is one of Australia and New Zealand’s largest bus operators.
The Go-Ahead board turned down four earlier approaches, including a first at £9.75 made in January.
“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,“ said Go-Ahead’s chief executive Christian Schreyer.
The company earlier on Monday revealed it had also received an approach from Kelsian Group. Kelsian responded on Tuesday that it could still make a bid for Go-Ahead, and urged shareholders to take no action regarding the Kinetic bid.
Shares in Go-Ahead rose 12 per cent on Monday and a further 15 per cent on Tuesday to £15.40, as investors reacted to a potential bidding war.
“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,” the company said.
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 as well as the Aircoach blue bus service in Ireland, rejected a £1.23 billion 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 £595 million cash bid from German asset manager DWS, which scuppered a separate takeover offer by National Express.
Go-Ahead said the acquisition at £15 represented a 48.5 per cent premium to its share price compared to when First Group first announced its takeover interest, and set off investor speculation that other UK transport companies would be next to be targeted.
Go-Ahead’s Mr 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, Mr 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 £23.5 million 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.
Mr 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. — Copyright The Financial Times Limited 2022
