Shares in FirstGroup have climbed considerably after the operator rejected a hostile takeover approach from US private equity group, Apollo Management.
FirstGroup said it had received an all-cash offer, but said the offer had ‘fundamentally undervalued’ the company. The FirstGroup board unanimously rejected the offer.
It is thought that Apollo Management may have been trying to take advantage of FirstGroup’s ‘vulnerable’ situation. A profit warning issued in February saw its share price drop as low as 77p in March, down considerably from 153p in May 2017.
“The board of FirstGroup has considered the proposal in detail and believes that it fundamentally undervalues the company and is opportunistic in nature,” FirstGroup said.
Under UK law, Apollo Management now has until May 9 to make a firm offer or walk away from the business. After the story broke, FirstGroup had an estimated market value of about £1.2bn.
Reacting to the news, RMT General Secretary, Mick Cash, said: “This looks like yet another bunch of speculators and asset strippers homing in on the British transport sector.
“The only solution to this kind of uncertainty and instability is public ownership and the threat of a US-based hostile takeover of FirstGroup just reinforces that core message.”