The Go-Ahead Group, which operates the Southern Rail, Thameslink and Bus franchise, is considering bids from two bidders, making it the latest British transport company to become a possible acquisition target.
The group, a leading provider of bus services in London and around the country and operating the UK’s largest commuter rail network, Govia Thameslink Railway, said it had received possible unsolicited offers from Kelsian Group and of a consortium of Kinetic and Globalvia Inversiones.
Go-Ahead said the two conditional proposals were “at a level that, if a firm offer is made, the board should recommend to shareholders.”
Shares of Go-Ahead rose 20% Monday morning with the announcement, bringing its value to its highest level since the start of the 2020 pandemic.
Kelsian is a listed Australian transport provider in Sydney, where Go-Ahead has had previous contracts to modernize the rail system. Kinetic, which operates buses in Melbourne, and its bidding partner Globalvia Inversiones are largely owned by Canadian pension fund OP Trusts.
Go-Ahead also has contracts to run rail and bus services in Ireland, Singapore, Norway and Germany.
The news comes after a turbulent year for Go-Ahead in which he was embroiled in an accounting scandal with the discovery that he had unfairly kept more than £ 50 million from the government during the course of his rail franchise in the south. -East.
He was stripped of his contract and the trading of Go-Ahead shares on the London Stock Exchange was suspended in January after he failed to present the accounts pending a new audit. However, he has since won a more than three-year contract to run the Thameslink, Gatwick Express, Southern and Great Northern services.
Rival UK carriers have also been the target of acquisitions, with FirstGroup last week rejecting an offer from I Squared Capital and Stagecoach accepting an offer from DWS Infrastructure in March, as it previously appeared to merge with National Express .
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The value of transportation companies plummeted when the coronavirus affected March 2020 and the government advised the public to avoid all unnecessary travel. Go-Ahead’s share price fell by about 70% in one month at the start of the pandemic, as the UK rail franchise system was ruled out.
Since then, the number of passengers has recovered to only about 80% of 2019 levels on buses and trains. However, stable, albeit lower, profit margins are guaranteed by new UK rail contracts, which leads to renewed investor interest.
Operating companies have been told to save costs, but their revenues will not be affected by what is likely to be a summer of strikes. Widespread industrial action will begin next week.