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Author Topic: Possible takeover offer - Firstgroup  (Read 3929 times)
grahame
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« on: April 11, 2018, 10:54:15 pm »

http://otp.investis.com/clients/uk/first_group/rns/regulatory-story.aspx?cid=858&newsid=998669

Quote
Released : 11.04.2018

For immediate release

11 April 2018

FirstGroup plc
Statement re possible offer

The Board of FirstGroup plc (“FirstGroup” or the “Company”) notes the recent movement in FirstGroup share price and confirms that it has received a preliminary and highly conditional indicative proposal from Apollo Management IX L.P. (“Apollo”) relating to a possible cash offer for the entire issued and to be issued ordinary share capital of FirstGroup (the “Proposal”). The Board of FirstGroup has considered the Proposal in detail and believes that it fundamentally undervalues the Company and is opportunistic in nature. Accordingly, the Board of FirstGroup has unanimously rejected the Proposal.

There can be no certainty that any firm offer will be made nor as to the terms on which any firm offer might be made. A further announcement will be made in due course if and when appropriate.

In accordance with Rule 2.6(a) of the City Code on Takeovers and Mergers (the "Code"), Apollo must, by not later than 5.00 p.m. on 9 May 2018, either announce a firm intention to make an offer for the Company in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline will only be extended with the consent of the Takeover Panel in accordance with Rule 2.6(c) of the Code.

This announcement has been made by FirstGroup without the agreement or approval of Apollo.

In accordance with Rule 26.1 of the Code, a copy of this announcement will be available on FirstGroup’s website at www.firstgroupplc.com by no later than 12 noon (London time) on 12 April 2018. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.

The person responsible for arranging the release of this announcement on behalf of FirstGroup is Michael Hampson, Group General Counsel and Company Secretary.
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bignosemac
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« Reply #1 on: April 11, 2018, 11:10:11 pm »

https://en.m.wikipedia.org/wiki/Apollo_Global_Management

GWR and Ceasar's Palace as bedfellows? Interesting.

That FirstGroup have unilaterally released details of the approach is a little unusual. Are the board rattled?
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grahame
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« Reply #2 on: April 11, 2018, 11:27:36 pm »

From The Guardian

Quote
Bus and rail company FirstGroup has rejected a takeover approach from the American private equity group Apollo, the British transport operator has announced.

After shares rose more than 7% during trading on Wednesday amid rumours of a takeover bid, the board of FirstGroup issued a statement confirming an initial proposal had been made by Apollo Management but had been unanimously rejected, dismissing it as “opportunistic”.

The Aberdeen-based company, which runs several well-known travel operations, including Great Western railways, the American Greyhound Bus brand and First Bus, said the proposal was “preliminary and highly conditional”. The board said it rebuffed the approach because it “fundamentally undervalues” FirstGroup and is “opportunistic in nature.”

“There can be no certainty that any firm offer will be made, nor as to the terms on which any firm offer might be made. A further announcement will be made in due course if and when appropriate,” the FirstGroup board said in a statement.

Under the UK’s takeover rules, Apollo Management has until 9 May to clarify its intention to make an offer.

Last year, Apollo raised the largest private equity fund in history, totalling $24.6 billion earmarked for investments in the US, Canada and Western Europe.

FirstGroup was founded in 1995 through a merger of Badgerline and GRT Bus Group, growing into an international company with several rail and bus operations in the UK, Ireland, Canada and the United States. The firm now has around 100,000 employees and is listed on the London Stock Exchange, forming part of the FTSE 250 index.

The FirstGroup stock price had slipped since the start of the year amid Brexit concerns. Last summer the bus and train operator warned that its UK business was likely to be hit by falling consumer confidence following the decision to leave the EU.
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grahame
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« Reply #3 on: April 11, 2018, 11:30:53 pm »

And The BBC

Quote
Rail and bus operator FirstGroup has rejected a takeover offer from US private equity firm Apollo Management.
The FTSE-250 transport group disclosed the bid approach after its share price jumped in late trading in London.

Aberdeen-based FirstGroup, which has about 100,000 employees, runs Great Western Railway and America's iconic Greyhound bus services.

The company said in a statement that Apollo's offer "fundamentally" undervalued the company.

FirstGroup did not reveal any financial details about the offer, which was disclosed more than two hours after the London stock market closed. The company's shares finished 7.4% up.

FirstGroup, whose other operations include the Heathrow Airport Connect service and First Bus, had revenues of £7.5bn last year.

The company said in its statement: "The board of FirstGroup has considered the proposal in detail and believes that it fundamentally undervalues the company and is opportunistic in nature. Accordingly, the board of FirstGroup has unanimously rejected the proposal."

FirstGroup added that its disclosure of the approach was made "without the agreement or approval of Apollo".

Poor trading

Under the UK's takeover code, Apollo has until 9 May to launch a formal bid.

The company is one of the big US buyout firms, with more than $200bn (£140bn) of investments stretching from finance, food and property. It owns the casino operation Caesars Entertainment Corporation.

Apollo's approach comes after FirstGroup warned in February of trading weakness due to strong competition in the US. FirstGroup shares fell as low as 77p.

FirstGroup has also been targeted by Canadian activist investor West Face Capital, which disclosed a 5% stake in the business last June.

The UK company has not paid a dividend to shareholders since it raised £615m from a rights issue in 2013 to pay down debt, after it lost a contract to run Britain's West Coast rail franchise.
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grahame
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« Reply #4 on: April 15, 2018, 08:03:40 am »

Further comment from This is money on the company bidding, and its boss

Quote
The private equity chief battling to buy Great Western Railway owner First Group was paid £134million last year.

American businessman Leon Black, 66, is pursuing the Aberdeen-based rail-and-bus operator through Apollo Global Management, which he set up in New York in 1990.

His windfall last year was boosted by dividends and took his earnings in the past three years to £316.5million, cementing his position as one of the world’s best-paid bosses.

Black, who is worth an estimated £4.4billion, has acquired a portfolio which includes Norwegian Cruise Line, whirlpool brand Jacuzzi and Caesars Entertainment, owner of Caesars Palace.The married father of four has a keen interest in art and has spent millions on pieces by Raphael and Picasso. In 2012 he bought one of four versions of Edvard Munch’s The Scream for £84million – the highest price paid for a work of art at that time.

But he faces a fight to take control of First Group, which also owns the Transpennine Express and South Western Railway as well as Greyhound buses.

Rejecting Black’s approach this week, First Group said it ‘fundamentally undervalues the company and is opportunistic in nature’.
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grahame
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« Reply #5 on: April 30, 2018, 10:49:17 am »

FirstGroup break-up likely after Apollo bid

Of course, anyone can express an opinion - in this case a website called Passenger Transport

Quote
The break-up of FirstGroup is being predicted by City analysts and in the transport industry following a preliminary takeover bid from North American private equity investor Apollo Asset Management.

Although First rejected an initial approach from Apollo as “undervaluing the company” and “opportunistic”, major changes are expected regardless of whether Apollo comes back with a successful bid.

Analysts said First’s continued inability to deliver a substantial recovery across its US and UK divisions, following a £615m funds injection from shareholders in 2013 to pay down debt and invest in new buses, indicated that the task of turning round multiple underperforming businesses was “too big and too complicated”.

There has been a marginal improvement in the large US school bus division’s performance during that period. However, the UK bus division has failed to approach the profit margins achieved by other transport groups, the Greyhound coach business has faltered in the face of intense competition from airlines and cheaper car travel, and the finances of UK rail franchises are under pressure from lower than expected growth.


“Either way, it will not be business as usual, when this reaches its conclusion,” a longstanding City analyst told Passenger Transport. At a minimum, Apollo is expected to exit the UK rail business due to political unease at private equity ownership of franchises. Sale or closure of the worst performing UK bus businesses is also predicted in order to create a higher potential UK bus division.

[continues]
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grahame
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« Reply #6 on: May 08, 2018, 12:52:06 pm »

From FirstGroup

http://otp.investis.com/clients/uk/first_group/rns/regulatory-story.aspx?cid=858&newsid=1007173

Quote
The Board of FirstGroup plc (“FirstGroup” or the “Company”) notes the announcement made by Apollo Global Management, LLC ("Apollo") on behalf of certain of its affiliates that it does not intend to make an offer for FirstGroup.
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« Reply #7 on: May 09, 2018, 11:57:06 am »

FirstGroup shares plunge after Apollo fails to make formal offer
https://www.telegraph.co.uk/business/2018/05/08/firstgroup-shares-plunge-apollo-fails-make-formal-offer/
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Richard Fairhurst
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« Reply #8 on: May 09, 2018, 05:14:50 pm »

Should we have a whip-round?
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GBM
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« Reply #9 on: May 09, 2018, 07:49:39 pm »

Should we have a whip-round?
Please do.  It's my pension I'm looking at!
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bignosemac
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« Reply #10 on: May 14, 2018, 11:24:22 pm »

From The Telegraph:

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Transport giant FirstGroup is facing a mounting activist campaign to put itself up for sale in the wake of a failed takeover bid from American private equity firm Apollo.

The attack comes in a four-page letter from top shareholder West Face Capital that was sent to chairman Wolfhart Hauser on Friday, the latest assault on a major UK company from an activist investor.

The letter, seen by The Daily Telegraph, lambasts FirstGroup’s board for failing to address “chronic” underperformance, saying inaction paved the way for Apollo’s “opportunistic” bids.

It calls on the transport operator, which is responsible for Greyhound bus operations in America and bus services across the UK, to form a board subcommittee to undertake a full strategic review and identify the best way to boost shareholder value.


It should consider: a full sale of the £1.2bn company; a break-up; or the spin-off of FirstGroup’s North American operations, West Face argues. It holds a 2.5pc stake worth around £32m at the current share price, ranking it among the top 15 shareholders.

“It is time to acknowledge that the execution of its strategy has failed and that an alternative path must be taken,” West Face says. “Events over the past few weeks have only strengthened our view that decisive action is overdue.

“A comprehensive strategic review must be undertaken immediately to address chronic underperformance and unacceptably low valuation.”

FirstGroup, in response, said: “The board is open to all means of enhancing long-term value and welcomes the views of shareholders. The board believes there is considerable value in the scale and expertise of each of our businesses."

Under chief executive Tim O’Toole, who took charge in November 2010, FirstGroup shareholders have endured a nightmare. The shares collapsed five years ago after investors were whacked with a three-for-two rights issue to raise £615m. The dividend was also scrapped. The stock has never recovered and sits almost 70pc lower since Mr O’Toole’s appointment, at just 108p,

In a damning assessment of his stewardship, West Face claims he has steadfastly refused to act while taking home nearly £9m in pay.

It is time to acknowledge that the execution of its strategy has failed and that an alternative path must be takenWest Face in a letter to chairman Wolfhart Hauser
The Canadian fund says it is the fourth time in less than a year that it has outlined proposals to improve performance but every time the board has rejected them “without a compelling explanation”. On the first occasion, which was in July last year, Mr O’Toole dismissed calls for a strategic review arguing that his current strategy was already delivering “improved growth, better operational performance, more consistent returns”.

“The reality, however, is that Mr O’Toole has failed, and FirstGroup has underperformed relative to competitors,” the letter claims.

Apollo made two bids, but the board refused to disclose the price, then walked away last week, sending FirstGroup’s shares plunging 10pc.

West Face claims that a third of shareholders believe the company is undervalued and has demanded that a subcommittee is formed ahead of FirstGroup’s annual general meeting on July 17.

West Face declined to comment.

Meanwhile, the Government is expected to scrap the East Coast rail franchise imminently, with reports in The Financial Times this evening suggesting the London to Edinburgh line could be run by its current operators Stagecoach and Virgin under a “not-for-profit” deal with the Government.

The Government admitted last autumn that the franchise was unsustainable.

The Department for Transport declined to comment.

I'll make a prediction and say that FirstGroup, in its current guise, won't last another two years. Either takeover, carve up or, dare I say it, insolvency. I think the only thing that will save the rail division longer term is winning the West Coast Partnership franchise.

It'll be a miracle if Tim O'Toole stays at the helm into the 2020s.
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« Reply #11 on: May 15, 2018, 05:47:04 am »

Quote
”chronic” underperformance
You can say that again! And has been for years.
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grahame
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« Reply #12 on: June 01, 2018, 09:13:23 am »

This topic has been split with Tim O'Toole's departure on 31st May.   See

http://www.firstgreatwestern.info/coffeeshop/index.php?topic=19881.0
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bignosemac
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« Reply #13 on: September 28, 2018, 12:12:11 am »

Current FirstGroup Executive Chairman, Wolfhart Hauser, has this week bought another huge chunk of FirstGroup shares. That's now over 30,000 shares he's bought in the last three months.

I wonder if this is because he believes his plans will turn the company around and he is putting his own money where his mouth is, or is it because he knows the end game is approaching and there will be a takeover offer that'll bump up the share price...
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« Reply #14 on: September 28, 2018, 05:13:55 am »

or is it because he knows the end game is approaching and there will be a takeover offer that'll bump up the share price...

Trading on non public info is an offence isn’t it?

Sounds more like a management buyout kind of scenario
« Last Edit: September 28, 2018, 05:19:01 am by LiskeardRich » Logged
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