Statement regarding I Squared

RNS Number : 2171W

FirstGroup PLC

16 August 2022

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN 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 £1bn 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   [phone]

Faisal Tabbah, Head of Investor Relations

Rothschild & Co   [phone]

Avi Goldberg / Jessica Dale

J.P. Morgan Cazenove   [phone]

Richard Perelman / James Robinson / Vladimir Ivanov

Goldman Sachs International   [phone]

Eduard van Wyk / Bertie Whitehead / Nick Harper

Brunswick Group LLP   [phone]

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 £4.6 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.

 

END

 

 

OFDSFFFDMEESELA