Transport giant FirstGroup is facing a shareholder rebellion from Schroders over a proposed £1.2bn takeover bid from a US private equity firm.
Schroders, FirstGroup’s biggest shareholder with a nearly 18 per cent stake, called I Squared Capital’s offer “unattractive”, adding that the figure failed to reflect FirstGroup’s weight in the UK’s railway sector.
FirstGroup operates Avanti West Coast, Great Western Railway and South Wester Railway, having previously sold its US Greyhound bus service for £125m late last year.
I Squared’s bid values the company at up to 163.6p per share, including 45.6p which is conditional on the amount FirstGroup will receive from the Greyhound sale.
“The proposal is highly conditional and leaves shareholders exposed to downside risks at a time when we believe the stand-alone company has attractive growth prospects, a strong balance sheet and a depressed valuation,” Schroders UK equity fund manager Andy Simpson said in a statement to The Sunday Times.
“We firmly believe that any offer needs to fairly reflect the attractive characteristics and scarcity value of the underlying assets.”
FirstGroup’s shares are currently trading at 137p apiece, up a marginal 0.37 per cent by mid-afternoon today – but a significant amount below the top-end of I Squared’s offer.
The transport group has until June 14 to consider the approach.