FirstGroup to Acquire RATP Dev Transit London for £90 Million

FirstGroup Plc has announced an acquisition of RATP Dev Transit London for an enterprise value of £90 million, aiming to expand its market presence in the UK bus service sector.

Date: 10-12-2024

AI Rating: 7

FirstGroup Plc has reported a significant strategic move by acquiring RATP Dev Transit London Limited for an enterprise value of 90 million pounds. This acquisition underlines FirstGroup's ambition to grow in the public transport domain, particularly in London's bus service, where RATP holds a 12% market share.

The analysis highlights that RATP London's revenues for 2023 reached 271 million pounds, providing FirstGroup with an immediate revenue base. The acquisition is projected to be broadly earnings neutral in fiscal years 2025 and 2026, suggesting that it may not negatively impact earnings reports in the near term.

Moreover, operational forecasts indicate a potential increase in annual revenues to a range of 300 million to 350 million pounds over the next five years. This indicates a positive trajectory by capitalizing on evolving route contracts within the region.

Additionally, the report mentions that operating margins are expected to align with historical London levels of approximately 6-7%. This stable margin expectation indicates a balanced outlook toward profitability following the acquisition.

Despite requiring French government approval and Transport for London consent, this acquisition reflects FirstGroup's strategic positioning in the competitive UK bus service market and could lead to enhanced market capabilities as their operations expand.

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