First will make a return to London in 2025, some 12 years after leaving, while RATP Dev refocuses on other projects
FirstGroup has announced that it has signed an agreement to acquire RATP Dev Transit London and its subsidiaries from RATP Développement (RATP Dev) in a sale valued at £90 million in ‘enterprise value’ and underpinned by around £100m of acquired assets. The acquisition will see First re-enter the London bus market, which it exited in 2013, with a roughly 12% market share, comprising 10 depots across Central and West London (four owned and six leased), a fleet of 982 buses, of which a third are electric, and some 3,700 employees over 80% of whom are drivers.
The acquisition will be partly financed with £45 million from FirstGroup’s existing cash reserves. First believes the acquisition will be broadly earnings neutral in the 2025 and 2026 financial years, with annual revenues expected to grow to £300m-£350m, with operating margins in line with historical London levels of around 6-7%. RATP London’s current management team will transfer with the business and are expected to be retained post-acquisition.
The take-over is subject to approval by the French government in its capacity as the ultimate owner of the RATP business, and is conditional on TfL consent to the change of control. First anticipates completion in the first half of 2025.
FirstGroup Chief Executive Officer Graham Sutherland said: “This is a significant acquisition for the Group that will diversify our portfolio and materially grow our earnings in the medium term. It allows us to enter the London bus market at scale and will also bolster our credentials as we participate in future franchising opportunities across the UK. We look forward to continuing to build on our relationship with TfL and welcoming RATP London’s employees into the Group, to continue the transformation of the business and to capitalise on the growth potential in the London market.”
RATP Dev said the transaction will allow it to focus its resources on its urban rail strategy, in particular driverless metro and high-capacity commuter rail, and in markets where the company has a significant multimodal presence. The company entered the London scene in 2011, and currently operates 89 routes.
“This strategic decision will position RATP Dev Transit London for continued success, development and capital expenditure under new ownership, while allowing RATP Dev to focus its resources on its key markets and urban rail strategy, which is a core expertise of the Group. We are currently involved in six large-scale mobilisation, opening or extension projects for driverless metro and urban rail across the world, as well as eight major bids,” said Mehdi Sinaceur, Deputy CEO and member of the RATP Dev Executive Board. “We are confident that FirstGroup plc, with its wide-ranging expertise and commitment to driving modal shift and leading in social and environmental sustainability, is the ideal partner to support RATP Dev Transit London’s continued success and contribute to sustainable transportation in London.”
