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FirstGroup to return £500m to shareholders via tender offer

By Jenny McCall

11:08, 27 October 2021

A picture of a person holding mobile phone with FirstGroup logo in front of business web site
Transport company FirstGroup says it also plans to consider further distributions to shareholders – Photo: Shutterstock.

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.

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Tender offer

“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.”


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“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.”

Read more: FirstGroup reports good results, £500m to shareholders


The difference between trading assets and contracts for difference (CFDs)

The main difference between contracts for difference (CFD) trading and trading assets, such as FX pairs, commodities and stocks, is that with CFDs you don’t own the underlying asset.

You can benefit if the market moves in your favour or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.

CFDs are leveraged products, which means both profits and losses can both be magnified. With CFDs, you only need to deposit a percentage of the full value of the trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example. Make sure you understand how CFD trading works before investing.

CFDs attract overnight costs to hold the trades (unless you use 1:1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also need to pay a broker’s commission or fees when buying and selling assets directly, and you’d need somewhere to store them safely.

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