Go-Ahead Group Plc, the biggest operator of London’s commuter trains and iconic double-decker buses, accepted a £648 million ($789 million) takeover bid from an investor group backed by Australian rival Kinetic.
Shareholders of Go-Ahead will receive a total of 1,500 pence per share in cash, according to a statement Monday. That represents a 24% premium to Go-Ahead’s closing price on Friday, the last full trading day before Bloomberg News reported takeover interest in the company.
The Kinetic consortium is offering 1,450 pence per share in cash for each Go-Ahead share, and investors will receive a special dividend of 50 pence per share in place of a final dividend for this financial year. Kinetic, which is backed by Canadian pension fund OPTrust, is teaming up with Spanish transport company Globalvia Inversiones SAU for the acquisition.
Bloomberg News reported earlier that OPTrust was in advanced talks on a potential acquisition of Go-Ahead and could announce a deal in the coming days. Go-Ahead has also attracted interest from Sydney-listed transport operator Kelsian Group Ltd.
Go-Ahead runs nearly a quarter of London’s buses, including some of the city’s zero-emission fleet. The company also operates Govia Thameslink, the UK’s biggest railway company, which is in charge of commuter-train services into London as well as the Gatwick Express line to one of the capital’s airports.
Rail Operations
The company was awarded a contract in March to run the network for three more years. Go-Ahead also operates transport services in Ireland, Singapore, Norway and Germany.
Takeovers of UK transport companies have been picking up as investors bet on a rebound in post-Covid travel and seek the steady, long-term returns offered by government-backed contracts. DWS Infrastructure agreed in March to acquire bus operator Stagecoach Group Plc, trumping an earlier offer from National Express Group Plc. Earlier this month, British bus and train operator FirstGroup Plc rejected a takeover approach from I Squared Capital.
Kinetic runs the largest bus network in Australia and New Zealand, while Madrid-based Globalvia operates metro railways in four Spanish cities as well as international highway concessions.
Go-Ahead directors plan to unanimously recommend that shareholders vote in favor of the deal, according to Monday’s statement. It is expected to be completed in October subject to regulatory approvals.
UBS Group AG is lead financial adviser to the buyer consortium, which is also working with Banco Santander SA. Mitsubishi UFJ Financial Group Inc. and Santander are providing debt financing for the deal. Rothschild & Co. is lead adviser to Go-Ahead, which is also receiving advice from Investec Plc and Peel Hunt Ltd.
Australian investment firms including Macquarie Group Ltd. and AustralianSuper have also been targeting infrastructure assets more broadly in the UK, planning to invest £28.5 billion in the coming years. A Macquarie consortium earlier this year agreed a multibillion-pound deal to buy 60% of the National Grid Plc gas-transmission business.
In September, Go-Ahead and its French partner Keolis SA were stripped of their rights to run the Southeastern rail network, which connects London with the counties of Kent and Sussex, after failing to turn over funds to the government as specified by franchise terms. The sale of Go-Ahead comes as Britain’s RMT labor union threatens a three-day strike of 50,000 rail workers starting June 21 in a dispute over pay and job security.