FirstGroup (LSE:FGP), the UK's largest train operator, is assessing a takeover bid from a US private equity firm worth £1.2bn.
The Aberdeen-based bus and rail operator said it received unsolicited proposals from I Squared Capital, which were unanimously rejected, before getting another proposal received on Wednesday evening that it is evaluating.
The Miami, Florida-based buyout firm is attempting to swoop for the UK transport group with an offer 118p per share in cash and the right to earn a further 45.6p per share, depending on the outcome of payouts from the sale of its US transit business and the net proceeds from the sale of Greyhound last year.
Shares in FirstGroup headed 12.2% higher early Friday to 145.66p, up 22% over the week, after the announcement on Thursday.
After deciding to withdraw from North America and focus on the UK market, last year's sale of its bus operations in the US for £3.3bn cleared the majority of its debts. It also sold Greyhound, a US intercity coach business, for £125mln.
Broker Liberum said: "We see a minimal premium being offered for the business, while the contingent value rights do not reflect the full potential of FirstGroup’s incremental sources of value and leave shareholders exposed to ongoing downside risk."
Buy, sell
The offer comes after the £595mln takeover of fellow transport group Stagecoach Group PLC (LSE:SGC) by German infrastructure group DWS was completed last week.
I Squared's bid also comes just over a week after PE major KKR agreed to buy London-listed energy producer ContourGlobal PLC (LSE:GLO) for £1.75bn.
The Florida-based PE firm also acquired portable power company Aggreko (LSE:AGK) from Asda's co-owners TDR Capital.
UK companies have been attracting interest from PE firms as well as trade buyers, with Ideagen, Clinigen, Homserve attracting bids in the past six months, following the scooping up of companies including Asda (snapped up by the Issa brothers and TDR Capital for £6.8bn), Morrisons (bought by Clayton Dubilier & Rice), and G4S during the pandemic.
Morrison itself recently won the battle to buy out convenience store group McColl’s in a rescue deal,