Firstgroup re-enters London bus market with £90m acquisition
Transport giant Firstgroup has re-entered the London bus market after buying one of the capital’s largest operators.
The London-listed firm said on Tuesday it had signed a £90m deal to take RATP London off the hands off its owner, the French-state backed public transport provider RATP Group.
News of the merger, which is still subject to French government approval and consent from TfL, sent shares up over four per cent in early trading.
RATP London holds around 12 per cent market share in the city and its operations include London’s iconic red buses. The majority of London’s bus network is run by Transport for London (TfL), but other private operators include Arriva and the Go-Ahead Group.
“This is a significant acquisition for the group that will diversify our portfolio and materially grow our earnings in the medium term,” Firstgroup’s chief executive, Graham Sutherland, said.
“It allows us to enter the London bus market at scale and will also bolster our credentials as we participate in future franchising opportunities across the UK,” he added.
Should the deal be given the green light, Firstgroup will take control of RATP’s 10 depots across Central and West London, alongside its fleet of around 1,000 buses, a third of which are now fully electric.
RATP employs 3,700 people in the capital, more than 80 per cent of whom are drivers. It booked £271m in revenue last year
It comes just a few days after FTSE 250-listed Firstgroup announced the acquisition of the open-access rail operator Grand Union Trains.
The company intends to finances its latest UK acquisition with £45m in cash from its reserves. The tie-up is expected to grow annual revenue to between £300m to £350m over the next five years, with operating margins of around six to seven per cent, in line with historical London levels.