FirstGroup PLC (LSE:FGP) has said it is buying Ensign Bus Company (Ensignbus) in a deal that will provide synergies and growth opportunities in the business-to-business (B2B) and bus vehicle dealership markets, as well as enhance the group’s local commercial bus operations in Essex.
In a statement, FirstGroup noted that Ensignbus is a high-performing business with strong positions in B2B and regional commercial bus operations that complement FirstGroup’s operations in Essex. The acquisition price was not disclosed.
The company pointed out that Ensignbus also has a vehicle refurbishment and re-sale business that buys used vehicles and refurbishes to modern standards before re-selling.
Firstgroup said this will benefit its First Bus business and the wider UK bus industry as the oldest, most polluting diesel buses are taken out of service, noting that the market for the resale of lower emission used diesel vehicles is expected to remain robust in the medium term, followed by the emergence of a similar market for the resale of zero-emission vehicles.
If the acquisition completes before FirstGroup’s FY2023 year-end, the company anticipates a year-end adjusted net cash position of £70mln-£80mln, reflecting the ongoing buyback programme and the timing of net capital expenditure and working capital flows.
Graham Sutherland, FirstGroup’s chief executive officer commented: “The acquisition of Ensignbus, a long-established, high-performing business, will allow us not only to grow our B2B offering but to also enhance our operational footprint in Essex.
“This is a strategically and financially accretive growth opportunity for us, and one that is fully aligned to our balanced capital allocation policy.”