MORE than £160 million was wiped off the stock market worth of Aberdeen-based bus and rail company FirstGroup yesterday, after a US suitor abandoned a takeover approach.
Shares in FirstGroup dropped by 12.2 per cent in the wake of news of US private equity house Apollo’s withdrawal, closing down 13.5p at 97.5p. This reduced FirstGroup’s stock market capitalisation from around £1.34 billion to £1.18bn.
The Scottish company had last month revealed it had received a bid approach from Apollo.
FirstGroup – revealing its board had unanimously rejected “two preliminary and highly conditional indicative proposals from Apollo” relating to a possible cash offer – highlighted its confidence that its own prospects for creating shareholder value were “strong”.
The company, which employs about 4,000 of its global workforce of around 100,000 in Scotland and has a total of about 30,000 staff in the UK, added that it would update the market on its outlook when it announced full-year results at the end of this month.
Apollo Global Management announced to the stock market yesterday morning that neither it, nor investment funds managed by its affiliates, intended to make an offer to acquire FirstGroup.
Noting Apollo’s announcement, FirstGroup declared: “In recent weeks, the board of FirstGroup received two preliminary and highly conditional indicative proposals from Apollo relating to a possible cash offer for the entire issued and to be issued ordinary share capital of FirstGroup.
“Having considered them in detail, the board of FirstGroup concluded that the proposals fundamentally undervalued the company. Accordingly, the board of FirstGroup unanimously rejected the proposals.”
It added: “The board of FirstGroup continues to believe in the strong prospects for shareholder value creation available to the company. FirstGroup will publish its full-year results for the year to March 31 2018 on May 31 and will update the market on the company’s outlook at that time.”
FirstGroup announced on April 11 that it had received “a preliminary and highly conditional indicative proposal from Apollo Management IX LP relating to a possible cash offer”. It declared at that stage that its board had unanimously rejected the proposal.
More than £140 million was wiped off FirstGroup’s stock market value on February 21 after the company warned of pressure on earnings from intensifying competition from airlines faced by its Greyhound coach business in North America, and from severe snowstorms.
Shares in FirstGroup dropped by 12 per cent or 11.65p to 84.4p during that session, after the company declared its outlook for adjusted earnings per share “is slightly reduced overall”.
This share-price fall reduced FirstGroup’s stock market worth to about £1.02 billion at that stage.
Greyhound’s like-for-like revenue in the period from the end of September to January was down 2.8 per cent on a year earlier on a constant-currency basis, as this business faced increasing competition from airlines on its long-haul routes. Revenues in FirstGroup’s UK bus operations were, in the period from the end of September to January, up by 1.4 per cent on a year earlier on a like-for-like basis.
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