RATP LONDON acquired by FIRSTGROUP

FirstGroup signed an agreement on 10 December 2024 to acquire RATP Dev Transit London and its subsidiaries from RATP Dev UK, at an enterprise value of £90m. The purchase was made through its subsidiary First Bus Holdings and covered the entire share capital of the holding company and its three operating businesses, London Transit, London Sovereign and London United Busways. It took FirstGroup into the London bus market, where RATP London held about 12% of a market worth 2.1 billion pounds a year, equivalent to some 46% of the whole UK bus market. At the time of the deal, RATP London generated revenue of £250–500M, ran around 90 Transport for London route contracts and operated a fleet of about 1,000 buses, a third of them fully electric, from ten depots in central and west London, four owned and six leased. It employed around 3,700 people, more than 80% of them drivers. The senior management team, most of whom had joined over the previous three years, had put in place a turnaround plan combining tighter bidding discipline, the early exit of loss-making routes and better operational performance, and was to transfer with the business. FirstGroup financed the purchase with 45 million pounds of its own cash and the assumption of RATP London’s asset-backed vehicle finance leases, while the seller repaid or assumed the rest of the debt before completion. The enterprise value was underpinned by about 100 million pounds of physical assets, including freehold depots at Fulwell, Hounslow, Shepherds Bush and Stamford Brook. FirstGroup expected the deal to be broadly earnings neutral in its 2025 and 2026 financial years, as it used onerous contract provisions covering routes bid before 2022, and anticipated annual revenue of 300 to 350 million pounds within five years at operating margins of 6 to 7%. Completion was subject to French government approval, as ultimate owner of the seller, and to Transport for London consenting to the change of control, with a longstop date of 30 April 2025. RBC Europe acted as financial adviser and corporate broker to FirstGroup, alongside Panmure Liberum as corporate broker.