14th Jun 2022 14:17
(Alliance News) - Shares in Go-Ahead Group PLC rallied on Tuesday on the prospect of a "takeover battle", as two suitors vie for the public transport firm.
The stock was trading 17% higher at 1,594.00 pence on Tuesday afternoon in London, and shares have gained 32% since the start of the week.
Kelsian Group Ltd - an Adelaide-based ferry, bus, and light rail operator in Australia, Singapore and the UK - urged the shareholders of Go-Ahead on Tuesday to take no action on a rival takeover offer, saying it is in talks with Go-Ahead for a cash bid of its own.
Kelsian, which was founded in 1989 and has 9,500 employees, noted that it has operated in London for 10 years and so it knows the UK market well. Kelsian and Go-Ahead also overlap in Singapore, where they both operate bus services.
Newcastle, England-based peer Go-Ahead on Monday said it agreed to a takeover offer from Gerrard Investment Bidco Ltd, a subsidiary of a consortium consisting of Kinetic Holding Co Pty Ltd and Globalvia Inversiones SAU. Kinetic is a bus operator in Australia and New Zealand, while Globalvia is a Madrid-based transport infrastructure firm.
Under the terms of the deal, the consortium will acquire Go-Ahead for 1,500p per share, comprising 1,450p in cash, and a special dividend of 50p, in lieu of a final dividend for the financial year ending July 2. The offer values Go-Ahead at GBP647.7 million.
The full price reflects a 24% premium to Go-Ahead's closing price of 1,210p on Friday last week.
However, broker Liberum said: "We do not believe that the Kinetic/Globalvia consortium offer is likely to be the end of the matter. It has not offered knockout multiples."
Liberum, believing the 1,500p bid undervalues Go-Ahead, raised its price target on the stock to 1,770p from 1,350p. A 1,770p bid would value Go-Ahead at GBP764.2 million in total.
It believes a "takeover battle" could be on the cards.
"Importantly, we understand that there is no break fee, so there is no obstacle to the board switching its recommendation to a superior alternative offer, should one be made. In the meantime, shareholders are now underpinned at 1500p," said Liberum.
By Tom Waite; [email protected] and Lucy Heming; [email protected]
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