US investor tries to buy FirstGroup for up to £1.2bn

FirstGroup said that it is looking through a new takeover proposal from a serial suitor based in the US.

The company said that it was the latest of a series of “unsolicited” and “conditional” proposals from Miami-headquartered I Squared Capital Advisors.

So far they have all been rejected.

The latest attempt hit the desk of FirstGroup directors yesterday. It offers 118p in cash up front for the business and another 45.6p based on some conditions.

The up-front part of the deal is worth about £885 million to shareholders, the second could hand them an additional £340 million. The business said it is “evaluating” the latest proposal.

Shares in FirstGroup soared after the news, rising 9.3% to 130.5p.

“The board of FirstGroup notes the recent share price movement,” the transport business told shareholders on Thursday.

“The company has received a series of unsolicited, conditional proposals from I Squared Capital Advisors.”

“The board together with its advisers, is currently evaluating the latest approach, received yesterday evening, which provides for a cash component of 118 pence per share and a contingent right to up to a further 45.6 pence per share.”

I Squared had told the board that the extra 45.6p part of the deal is based on how much the company makes from the sales of two businesses.

When the company sold US transport company First Transit in 2021 the contract included an earnout clause which means it can collect up to £170 million if the business performs well enough under the new ownership.

Depending on how much of this money comes through and the proceeds from a separate sale, the price I Square will pay could rise by as much as £340 million.

The extra component is “based on the outcome of the First Transit earnout and the net proceeds realised from the Greyhound legacy assets and liabilities,” FirstGroup said.

“The previous approaches were all unanimously rejected by the board.”

The company promised to keep shareholders updated.