In a strategic move to expand its footprint in the UK capital, FirstGroup plc has announced an agreement to acquire RATP Dev Transit London (RDTL) from RATP Développement SA for an enterprise value of £90 million.

Key Details of the Acquisition

  • Strategic Expansion: This acquisition marks FirstGroup’s significant entry into the London bus market, securing approximately a 12% market share. RDTL operates around 1,000 buses across 10 depots in Central and West London, with a workforce of approximately 3,700 employees.
  • Financial Structure: The deal is financed through £45 million from FirstGroup’s existing cash reserves, with the remaining £45 million accounted for by assuming RDTL’s asset-backed vehicle finance leases.
  • Operational Outlook: FirstGroup anticipates that the acquisition will be broadly earnings neutral in the fiscal years 2025 and 2026. As the route contract portfolio evolves, annual revenues are expected to grow to between £300 million and £350 million, with operating margins aligning with historical London levels of approximately 6-7%.
  • Completion Timeline: Subject to necessary approvals from the French government and Transport for London (TfL), the acquisition is expected to be finalized in the first half of 2025.

Strategic Rationale

Graham Sutherland, CEO of FirstGroup, stated, “This is a significant acquisition for the Group that will diversify our portfolio and materially grow our earnings in the medium term. 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 UK.”

The acquisition aligns with FirstGroup’s strategy to expand its presence in urban transportation markets and leverage growth opportunities in the UK’s largest city.

About RATP Dev Transit London

RDTL encompasses London United Busways Limited, London Sovereign Limited, and London Transit Limited, operating a fleet that includes a significant number of fully electric buses, contributing to sustainable urban transport solutions in London.

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Next Steps

FirstGroup will work closely with RDTL’s existing management team to ensure a smooth transition and integration process, aiming to enhance service delivery and operational efficiency in the London bus market.

This acquisition represents a pivotal development in FirstGroup’s growth strategy, positioning the company as a key player in London’s public transportation sector.