RATP DEV TRANSIT LONDON acquired by FIRSTGROUP
Context
FirstGroup plc has completed the acquisition of 100% of RATP London from RATP Développement. The transaction represents FirstGroup's strategic re-entry into the London bus market at scale, following its exit in 2013. The strategic rationale for the acquisition is to diversify FirstGroup's portfolio and secure a significant foothold in the UK's largest bus market, which accounts for 46% of the national industry. RATP London brings a high-quality fleet (34% electric) and c. 90 TfL contracts with a weighted average remaining life of 3.3 years. FirstGroup intends to maintain the existing senior management team to continue their proven turnaround plan, which has already stabilized the workforce and improved bid discipline. The deal is underpinned by c. £100m in physical assets, including four freehold depots valued at c. £50m. Financially, the acquisition is expected to be earnings-neutral in FY 2025 and FY 2026 due to the utilization of £40–50m in onerous contract provisions. Long-term, FirstGroup expects to grow annual revenues to £300–350m and achieve operating margins of 6–7%, supported by synergies in fuel pricing, insurance, and fleet purchasing.
RATP DEV TRANSIT LONDON, which reported an EBITDA margin of in 2023, is valued in this transaction at an EV/EBITDA multiple of , a level to compare with the average currently observed in the Business Services sector (11.4x).
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Target
Formed through the consolidation of London United, London Sovereign, and London Transit, RATP London is a principal bus operator in the UK capital with a ~12% market share. The company operates approximately 90 Transport for London (TfL) route contracts, primarily in West, North-West, and South-West London. Its infrastructure includes 10 depots (4 owned, 6 leased) and a fleet of roughly 1,000 buses, one-third of which are already fully electric. The business model is based on a regulated franchising system where TfL sets routes and collects fares, while the operator manages the fleet and drivers. RATP London’s value proposition is built on high operational reliability and a robust "turnaround plan" focused on bid discipline and cost control. As an early mover in green transit, the company is strategically aligned with TfL’s target of a zero-emission fleet by 2034, positioning itself as a key partner in London’s sustainable urban mobility infrastructure.
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REFERENCES
Valuation range: EV 50M - 150M GBP
Revenue range: 250M - 500M GBP
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Authors: This transaction was contributed by a verified mynth contributor and cross-checked against available transaction documents and official company communications.
Press release: view release
Acquirer: firstgroup