TIDMFGP
RNS Number : 2171W
FirstGroup PLC
16 August 2022
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PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR
REGULATIONS OF THAT JURISDICTION
FOR IMMEDIATE RELEASE
16 August 2022
FirstGroup plc
Statement regarding I Squared
The Board of FirstGroup plc ("FirstGroup" or the "Group") notes
the announcement by I Squared Capital Advisors (UK) LLP ("I
Squared") today that it does not intend to make a firm offer for
FirstGroup. As a result, I Squared is bound by the restrictions
contained within Rule 2.8 of the City Code on Takeovers and Mergers
(the "Code"). The unsolicited offers received from I Squared
resulted in a final proposal (the "Proposal") on 15 August 2022 of
135 pence per FirstGroup share (comprising 133.9 pence plus the 1.1
pence final dividend being paid on 19 August 2022) together with
further contingent value from the First Transit earnout. The Board,
having carefully evaluated the Proposal together with its advisers,
concluded that the cash component significantly undervalues
FirstGroup's continuing operations and its future prospects, and
the contingent value does not provide shareholders with sufficient
certainty.
FirstGroup is a cash generative, well capitalised business with
a significantly de-risked balance sheet and strong positions in the
UK bus and rail markets and, with new Chief Executive Officer
Graham Sutherland in place, has a resilient and robust platform
from which to develop and maximise both organic and inorganic
opportunities that exist for growth in the core business.
Additionally, there is further value to be realised from
FirstGroup's non-core businesses which include the value of the
legacy Greyhound assets and residual liabilities as well as the
value of the First Transit earnout.
Furthermore, in First Bus, the Group continues to progress
towards delivering its 10% margin target and further passenger
volume and yield growth over time, reflecting the focus on adapting
operations to passenger demand and in managing the challenging
inflationary environment as pandemic recovery funding tapers off.
FirstGroup is also well placed to benefit from over GBP1bn funding
announced by the UK government as part of the National Bus
Strategy.
In Rail, FirstGroup is well positioned to capitalise on the move
to lower risk, long-term model of rail operations following the
introduction of the National Rail Contracts, as evidenced by the
recently announced agreements with the Department for Transport. In
addition, FirstGroup has a range of growth opportunities outside of
the National Rail Contracts where it is well positioned to create
further value.
The Board is confident the transformation undertaken since the
arrival of David Martin as Chairman in August 2019 will deliver
significant long term value creation for FirstGroup shareholders.
The Board reaffirms its expectation that, while some uncertainty
remains around the pace of recovery in light of the pandemic and
the broader macroeconomic backdrop, the Group will make significant
further progress in the current financial year.
This announcement has been made without the consent of I
Squared.
For further information please contact:
FirstGroup +44 207 725 3354
Faisal Tabbah, Head of Investor Relations
Rothschild & Co +44 207 280 5000
Avi Goldberg / Jessica Dale
J.P. Morgan Cazenove +44 207 742 4000
Richard Perelman / James Robinson / Vladimir Ivanov
Goldman Sachs International +44 207 774 1000
Eduard van Wyk / Bertie Whitehead / Nick Harper
Brunswick Group LLP +44 207 404 5959
Andrew Porter / Simone Selzer
Notice related to financial advisers and corporate brokers
N.M. Rothschild & Sons Limited ("Rothschild & Co") which
is authorised and regulated by the Financial Conduct Authority in
the United Kingdom, is acting exclusively for FirstGroup and for no
one else in connection with the subject matter of this announcement
and will not be responsible to anyone other than FirstGroup for
providing the protections afforded to its clients or for providing
advice in connection with the subject matter of this
announcement.
J.P. Morgan Securities plc, which conducts its UK investment
banking business as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"),
is authorised in the United Kingdom by the Prudential Regulation
Authority (the "PRA") and regulated by the PRA and the Financial
Conduct Authority. J.P. Morgan Cazenove is acting as financial
adviser exclusively for FirstGroup and no one else in connection
with the matters set out in this announcement and will not regard
any other person as its client in relation to the matters in this
announcement and will not be responsible to anyone other than
FirstGroup for providing the protections afforded to clients of
J.P. Morgan Cazenove, or for providing advice in relation to any
matter referred to herein.
Goldman Sachs International is authorised by the Prudential
Regulation Authority and regulated by the Financial Conduct
Authority and the Prudential Regulation Authority. Goldman Sachs
International is acting exclusively for FirstGroup and no one else
in connection with the Transaction and will not regard any other
person (whether or not a recipient of this announcement) as a
client in relation to the Transaction and will not be responsible
to anyone other than FirstGroup for providing the protections
afforded to Goldman Sachs International's clients nor for giving
advice in relation to the Transaction or any other arrangement
referred to in this announcement
About FirstGroup
FirstGroup plc (LSE: FGP.L) is a leading private sector provider
of public transport services. With GBP4.6 billion in revenue and
around 30,000 employees, our UK divisions transported nearly 1.5m
passengers a day in the last financial year. First Bus is the
second largest regional bus operator in the UK, serving two-thirds
of the UK's 15 largest conurbations with a fleet of c.4,900 buses.
First Rail is the UK's largest rail operator, with many years of
experience running long-distance, commuter, regional and sleeper
rail services. We operate a fleet of c.3,800 rail vehicles through
four management fee-based train operating companies (Avanti, GWR,
SWR, TPE) and two open access routes (Hull Trains and Lumo)). We
create solutions that reduce complexity, making travel smoother and
life easier. Our businesses are at the heart of our communities and
the essential services we provide are critical to delivering wider
economic, social and environmental goals. We are formally committed
to operating a zero-emission First Bus fleet by 2035 and to cease
purchasing further diesel buses after 2022; and First Rail will
help support the UK Government's goal to remove all diesel-only
trains from service by 2040. In 2022 FirstGroup was named as one of
the world's cleanest 200 public companies for the third consecutive
year by sustainable business media group Corporate Knights in
partnership with US not-for-profit organisation, As You Sow.
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