Transport heavyweight Firstgroup has made a strategic move into the London bus sector with the acquisition of one of the city's major operators.
The Aberdeen-headquartered company, listed on the London Stock Exchange, announced on Tuesday that it had inked a £90m deal to acquire RATP London from its current owner, RATP Group, which is owned by the French state, as reported by .
The merger news, still pending approval from the French government and Transport for London (TfL), boosted Firstgroup's shares by over four percent in early trading. RATP London commands approximately 12 percent of the London bus market share.
While TfL operates the majority of the bus network, other private firms such as Arriva and Go-Ahead Group also play significant roles.
"This is a significant acquisition for the group that will diversify our portfolio and materially grow our earnings in the medium term," commented Graham Sutherland, CEO of Firstgroup. "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 º£½ÇÊÓƵ," he further elaborated.
Upon successful completion of the deal, Firstgroup will take over RATP’s 10 depots situated in Central and West London, as well as around 1,000 buses, a third of which are fully electric. RATP's workforce in London numbers 3,700, with over 80 percent being drivers.
Last year, the company reported revenues of £271m.
This announcement comes shortly after Firstgroup, part of the FTSE 250 index, revealed its acquisition of the open-access rail operator Grand Union Trains.
The firm plans to fund its latest º£½ÇÊÓƵ acquisition with £45m in cash from its reserves. The merger is projected to increase annual revenue to between £300m to £350m over the next five years, with operating margins of around six to seven per cent, consistent with historical London levels.
