FirstGroup plc, a British multi-national transport group based in Aberdeen, Scotland, has announced its proposal to return £500m ($685m) to shareholders, it revealed on Wednesday.
The company, which operates transport services across the United Kingdom and Ireland, announced that it plans to return the money to shareholders by way of a tender offer valued at 105 pence per share.
Share price rise
As a result of the announcement, FirstGroup’s stock price rose by almost 4% at 100.80p in afternoon trading today.
In July, FirstGroup finalised the disposal of its First Student and First Transit business to Swedish equity group EQT Infrastructure for net disposal proceeds of $3.1bn. At the same time, FirstGroup posted its intention to increase the return of value from £365m to £500m.
“Following consultation with Shareholders, the Board has decided that the appropriate first step is to conduct the Return of Value by way of the Tender Offer. Shareholders are therefore being invited to tender some or all of their Ordinary Shares for purchase on the terms and subject to the Conditions set out in the Circular to be published today,” the statement said.
The group has also said it intends to consider additional distributions to shareholders, following the finalisation of the First Transit Earnout, which is worth up to $240m
“Cash generative company”
David Martin, FirstGroup Executive Chairman said: “I am very pleased to announce the launch of the proposed Tender Offer. This marks the culmination of our portfolio rationalisation strategy, as announced in December 2019, which has refocused the Group on its leading UK public transport businesses.”
“In doing so, we have created a cash generative company with a well-capitalised balance sheet, a focused strategy and attractive growth prospects in our markets. The policy backdrop in the UK has never been more supportive and public transport has a critical role to play in helping communities and economies build back better and more sustainably. The premium for the Tender Offer reflects our confidence in our future prospects, as well as the substantial further sums expected to be realised by the Group over time from the disposals completed this year.”
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