Transport operator FirstGroup PLC (LSE:FGP) has expanded from its national railways and local bus businesses into sightseeing buses.
The FTSE 250-listed group has acquired operations of France’s RATP Développement in a deal valued at around £17 million.
The acquired operations, known to tourists under the Tootbus brand, include routes in London and Bath (including the Air Decker service from Bath to Bristol airport), and come with 63 buses, depots in Wandsworth and Keynsham and 190 staff.
FirstGroup boss Graham Sutherland said the purchase is part of a UK-focused "growth and diversification" strategy in two key markets.
"The integration of the businesses will also create material operational and cost synergies and the opportunity to grow our London route portfolio over time."
It follows another £90 million acquisition from RATP Dev completed earlier this year, which led to the establishment of First Bus London as a major operator with 83 Transport for London routes, or around 12% market share.
Analysts at Peel Hunt suggested that the sightseeing is more about diversifying the First Bus division while putting underused assets to better use, rather than empire-building.
The large freehold depot in Wandsworth can be leveraged not just for tourists, but also to bid for new TfL bus routes.
The newly acquired business made around a £600,000 operating loss last year and is expected to stay in the red during its first year under FirstGroup’s roof.
But by 2029, it’s expected to be pulling in £30 million in revenue.