London double-decker bus operator gets Canadian pension interest

GO-AHEAD Group, the biggest operator of London’s iconic double-decker buses, has attracted takeover interest from 2 suitors as infrastructure investors bet on a revival in the UK transport industry.

A consortium of Australian bus operator Kinetic Holding, which is backed by Canadian pension manager OPTrust, and Globalvia Inversiones made an unsolicited approach for Go-Ahead, according to a statement on Monday (Jun 13). The company also received separate takeover interest from Sydney-listed transport operator Kelsian Group, it added. 

London-listed Go-Ahead received a series of offers from each suitor, which it’s been reviewing with its financial adviser Rothschild & Co, it said in the statement. It’s now granted due diligence to both parties, as the latest proposals are at a level that Go-Ahead’s board would recommend to shareholders if the bids are firmed up.

Shares of Go-Ahead jumped after the company confirmed the takeover interest. The stock was up 19 per cent at 9:40 am on Monday in London, giving the company a market value of £620 million (S$1.1 billion) and putting it on track to close at the highest level since March 2020.  

Bloomberg News reported earlier that OPTrust was in talks about a potential deal for Go-Ahead and was arranging financing for the transaction. Each bidder has until July 11 to announce formal plans to make an offer, according to the statement. There’s no certainty about the terms of any potential takeover, Go-Ahead said. 

Go-Ahead runs nearly a quarter of London’s buses, including some of the city’s zero-emission fleet. The company operates Govia Thameslink, the UK’s biggest railway company, which is in charge of commuter-train services into London as well as the Gatwick Express line to one of the capital’s airports. 

The company was awarded a contract in March to run the network for 3 more years. Go-Ahead also operates transport services in Ireland, Singapore, Norway and Germany. 

Takeovers of UK transport companies have been picking up as investors bet on a rebound in post-Covid travel and seek the steady, long-term returns offered by such franchises. DWS Infrastructure agreed in March to acquire UK bus operator Stagecoach Group, trumping an earlier offer from National Express Group. Earlier this month, British bus and train operator FirstGroup rejected a takeover approach from I Squared Capital.

In September, Go-Ahead and its French partner Keolis were stripped of their rights to run the Southeastern rail network, which connects London with the counties of Kent and Sussex, after failing to turn over funds to the government as specified by franchise terms. 

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The potential sale of Go-Ahead comes as British labour group RMT threatens a 3-day strike of 50,000 rail workers starting on June 21 in a dispute over pay. BLOOMBERG