Go-Ahead Group’s board has accepted a takeover offer worth in the region of £650 million, but it might get yet another offer in very short order.
The initial deal was made with Australian bus operator Kinetic and highways and rail business Globalvia. But now, another Australian company, Kelsian, has stepped forward, mooted the possibility of it making an offer and recommending shareholders do nothing.
This wouldn’t be the first we’d heard of a rail-related buyout in recent times: FirstGroup has been the target of private equity firm I Squared recently. The board mulled the offer over, then unanimously rejected it.
The players in the Go-Ahead Group takeover
But who are the businesses in the potential bidding war for Go-Ahead Group?
Kinetic, one half of the accepted offer, are based in Australia and have been in operation since 1978. Since then, its bus network across New Zealand and Australia moves 75 million passengers a year. This is in part thanks to more than 90 long-term contracts with state governments in Australia, including Victoria, Queensland, Tasmania, New South Wales, and with the New Zealand government and all major councils.
Transport business Globalvia, meanwhile, was formed in 2007 and now manages 1,700 kilometres of highway in six countries, from USA to Spain. In terms of rail, its interests are concentrated around Spain, where it operates seven different railways (80km of network).
Kelsian is a major operator with contracts in bus (including Tower Transit in London and Singapore), marine and tourism, and light rail. It says it is Australia’s largest land and marine transport service provider and tourism operator.
A “compelling” offer
The deal with Globalvia and Kinetic promises a payday for the business and shareholders. It comes to £647.7 million. Go-Ahead shareholders are set to get 1,500 pence per share and a dividend of 50 pence in lieu of a final dividend for the year ending 2 July 2022. The board is recommending to shareholders to vote in favour of the acquisition, which is expected to be completed October 2022.
Christian Schreyer, group chief executive of Go-Ahead, said: “This is a compelling offer which combines an attractive valuation for shareholders with bright prospects for Go-Ahead’s operations and colleagues around the world.
“We have confidence in Go-Ahead’s future as an independent business, but see that being part of a truly global mass transit platform will yield exciting opportunities. We welcome the commitment of Kinetic and Globalvia to invest in the decarbonisation and digitalisation of our operations, and to support our strategy, The Next Billion Journeys.
“As a standalone business within a global platform, we will be better placed than ever to connect communities and to fulfil our purpose of moving our customers towards a smarter and healthier planet.”
“Take no action”
The announcement that there was an agreement on the sale of Go-Ahead was made after markets closed. But the next morning, before they opened again, Kelsian had released a statement. It said: “Kelsian believes that the potential combination with Go-Ahead would create an international leader in multi-modal, mass transit supporting a sustainability agenda for its passengers and governments, with strong growth prospects.
“Kelsian believes that, if an offer is made by Kelsian, it could bring to bear its expertise across safety, operational efficiency, digital, decarbonisation, and experience operating in the UK to enhance and accelerate the growth of Go-Ahead creating substantial value for Kelsian shareholders as well as benefiting wider stakeholders including passengers, governments and employees. Kelsian continues to carefully assess the opportunity with a disciplined focus on the strategic and financial rationale.
“Kelsian therefore urges Go-Ahead shareholders to take no action at this time.”
It did add a caveat, however. It said that this was not a firm intention to make an offer. “There can be no certainty that a firm offer will be made nor as to the terms on which any firm offer might be made,” it said. “If a possible cash offer by Kelsian is made in the future for Go-Ahead, there are a number of ways that this could be funded, however no decision regarding the appropriate funding mix has yet been made.”