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Go-Ahead prepares for bidding war

Public transport companies are proving popular takeover targets in the wake of the pandemic
June 14, 2022
  • Go-Ahead board supports 1,500p a share offer, a 24 per cent premium on its undisturbed price
  • Another buyer is in the running but yet to launch its own offer 

Go-Ahead (GOG) has agreed a £648mn takeover deal amid a flurry of M&A activity in the transport sector - but a second bidder looks poised to enter the fray. 

The UK-listed public transport provider has reached an agreement with a consortium made up of Kinetic, a Melbourne-based bus company, and Globalvia Inversiones, a Spanish infrastructure firm. Another Australian bus company is still considering a bid, however, so offers could climb from here. 

Under the terms of the accepted deal - which is not a final offer - Go-Ahead shareholders will receive 1,500p for each Go-Ahead share. This will consist of 1,450p in cash and a special dividend of 50p per share, in lieu of a final dividend for the year ending 2 July 2022. This represents a premium of 24 per cent to the company’s closing price 10 June - the last business day before the takeover bid was announced.

Go-Ahead’s chief executive Christian Schreyer said the company would remain a “standalone business within a global platform”, while Kinetic co-chief executive Michael Sewards said his company could “accelerate” Go-Ahead’s growth. 

Go-Ahead noted the impact other deals in the sector had had - including the rejected offer for First Group (FGP) at the end of May - as they had pushed up its own share price in anticipation of an offer being made. 

Kinetic and Globalvia may not have the final word, however. Kelsian -  a public transport group based in Adelaide that has also approached Go-Ahead - has urged shareholders to do nothing for the time being (although there is nothing for them to do until the scheme document is published). While Kelsian has yet to make a firm offer, it said it could accelerate growth at Go-Ahead “creating substantial value for Kelsian shareholders”. 

Analysts at Liberum said an offer of 1500p per share undervalued Go-Ahead, and raised their target price to 1,770p. They added that Kelsian had recently reduced its potential overlap with Go-Ahead by selling its East London bus operations to Stagecoach (SCG). However, Kelsian may be at a financing disadvantage given it is a listed company facing tighter leverage constraints. 

“We do not believe that the Kinetic/Globalvia consortium offer is likely to be the end of the matter,” Liberum said. 

Go-Ahead’s share price has risen by almost 40 per cent over the past five days.