REG - FirstGroup PLC - Statement regarding I Squared

FirstgroupAnnouncement

16/08/2022 14:45

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RNS Number : 2171W  FirstGroup PLC  16 August 2022

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FOR IMMEDIATE RELEASE

16 August 2022

FirstGroup plc

Statement regarding I Squared

The Board of FirstGroup plc ("FirstGroup" or the "Group") notes the
announcement by I Squared Capital Advisors (UK) LLP ("I Squared") today that
it does not intend to make a firm offer for FirstGroup. As a result, I Squared
is bound by the restrictions contained within Rule 2.8 of the City Code on
Takeovers and Mergers (the "Code"). The unsolicited offers received from I
Squared resulted in a final proposal (the "Proposal") on 15 August 2022 of 135
pence per FirstGroup share (comprising 133.9 pence plus the 1.1 pence final
dividend being paid on 19 August 2022) together with further contingent value
from the First Transit earnout. The Board, having carefully evaluated the
Proposal together with its advisers, concluded that the cash component
significantly undervalues FirstGroup's continuing operations and its future
prospects, and the contingent value does not provide shareholders with
sufficient certainty.

FirstGroup is a cash generative, well capitalised business with a
significantly de-risked balance sheet and strong positions in the UK bus and
rail markets and, with new Chief Executive Officer Graham Sutherland in place,
has a resilient and robust platform from which to develop and maximise both
organic and inorganic opportunities that exist for growth in the core
business. Additionally, there is further value to be realised from
FirstGroup's non-core businesses which include the value of the legacy
Greyhound assets and residual liabilities as well as the value of the First
Transit earnout.

Furthermore, in First Bus, the Group continues to progress towards delivering
its 10% margin target and further passenger volume and yield growth over time,
reflecting the focus on adapting operations to passenger demand and in
managing the challenging inflationary environment as pandemic recovery funding
tapers off. FirstGroup is also well placed to benefit from over £1bn funding
announced by the UK government as part of the National Bus Strategy.

In Rail, FirstGroup is well positioned to capitalise on the move to lower
risk, long-term model of rail operations following the introduction of the
National Rail Contracts, as evidenced by the recently announced agreements
with the Department for Transport. In addition, FirstGroup has a range of
growth opportunities outside of the National Rail Contracts where it is well
positioned to create further value.

The Board is confident the transformation undertaken since the arrival of
David Martin as Chairman in August 2019 will deliver significant long term
value creation for FirstGroup shareholders. The Board reaffirms its
expectation that, while some uncertainty remains around the pace of recovery
in light of the pandemic and the broader macroeconomic backdrop, the Group
will make significant further progress in the current financial year.

This announcement has been made without the consent of I Squared.

For further information please contact:

FirstGroup
 
+44 207 725 3354

Faisal Tabbah, Head of Investor Relations

 

Rothschild & Co
 
+44 207 280 5000

Avi Goldberg / Jessica Dale

 

J.P. Morgan Cazenove
 
+44 207 742 4000

Richard Perelman / James Robinson / Vladimir Ivanov

 

Goldman Sachs International
                                      +44
207 774 1000

Eduard van Wyk / Bertie Whitehead / Nick Harper

 

Brunswick Group LLP
 
+44 207 404 5959

Andrew Porter / Simone Selzer

 

Notice related to financial advisers and corporate brokers

N.M. Rothschild & Sons Limited ("Rothschild & Co") which is authorised
and regulated by the Financial Conduct Authority in the United Kingdom, is
acting exclusively for FirstGroup and for no one else in connection with the
subject matter of this announcement and will not be responsible to anyone
other than FirstGroup for providing the protections afforded to its clients or
for providing advice in connection with the subject matter of this
announcement.

J.P. Morgan Securities plc, which conducts its UK investment banking business
as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), is authorised in the United
Kingdom by the Prudential Regulation Authority (the "PRA") and regulated by
the PRA and the Financial Conduct Authority. J.P. Morgan Cazenove is acting
as financial adviser exclusively for FirstGroup and no one else in connection
with the matters set out in this announcement and will not regard any other
person as its client in relation to the matters in this announcement and will
not be responsible to anyone other than FirstGroup for providing the
protections afforded to clients of J.P. Morgan Cazenove, or for providing
advice in relation to any matter referred to herein.

Goldman Sachs International is authorised by the Prudential Regulation
Authority and regulated by the Financial Conduct Authority and the Prudential
Regulation Authority. Goldman Sachs International is acting exclusively for
FirstGroup and no one else in connection with the Transaction and will not
regard any other person (whether or not a recipient of this announcement) as a
client in relation to the Transaction and will not be responsible to anyone
other than FirstGroup for providing the protections afforded to Goldman Sachs
International's clients nor for giving advice in relation to the Transaction
or any other arrangement referred to in this announcement

About FirstGroup

FirstGroup plc (LSE: FGP.L) is a leading private sector provider of public
transport services. With £4.6 billion in revenue and around 30,000 employees,
our UK divisions transported nearly 1.5m passengers a day in the last
financial year. First Bus is the second largest regional bus operator in the
UK, serving two-thirds of the UK's 15 largest conurbations with a fleet of
c.4,900 buses. First Rail is the UK's largest rail operator, with many years
of experience running long-distance, commuter, regional and sleeper rail
services. We operate a fleet of c.3,800 rail vehicles through four management
fee-based train operating companies (Avanti, GWR, SWR, TPE) and two open
access routes (Hull Trains and Lumo)). We create solutions that reduce
complexity, making travel smoother and life easier. Our businesses are at the
heart of our communities and the essential services we provide are critical to
delivering wider economic, social and environmental goals. We are formally
committed to operating a zero-emission First Bus fleet by 2035 and to cease
purchasing further diesel buses after 2022; and First Rail will help support
the UK Government's goal to remove all diesel-only trains from service by
2040. In 2022 FirstGroup was named as one of the world's cleanest 200 public
companies for the third consecutive year by sustainable business media group
Corporate Knights in partnership with US not-for-profit organisation, As You
Sow.

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