Kelsian has abandoned a possible tilt for UK-based Go-Ahead Group

Kelsian won’t pursue a $1.5bn takeover bid for UK transport operator Go-Ahead, blaming the impact of market volatility on its share price.

Kelsian managing director Clint Feuerherdt. PICTURE: Supplied

International transport operator Kelsian has shelved its ambitions to make a bid for UK-listed firm The Go-Ahead Group, saying weakness in its share price has scuttled the plan.

Kelsian, which has public and tourism transport operations across Australia and internationally, told the ASX in mid-June that while Go-Ahead had accepted a $1.5bn bid from a consortium of Australia’s Kinetic and Spain’s Globalvia Inversiones, it was still considering its options.

While the offer had been accepted, until the scheme of arrangement for the accepted deal went through, there was the opportunity for Kelsian to lodge a competing offer.

On Thursday Kelsian put the idea to bed, telling the ASX that while the deal made sense in the long term, recent share market ructions made it unviable.

“Unfortunately, recent Australian equity markets have been volatile and external events have adversely impacted the Kelsian share price since 14 June 2022 when Kelsian first announced it was considering a possible offer for Go-Ahead,’’ the company said.

“The Kelsian board consider that Australian equity market conditions at this time do not enable Kelsian to pursue a possible transaction for Go-Ahead despite the long-term strategic and economic rationale of the potential transaction for Kelsian.’’

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Kelsian shares were up more than 14 per cent in morning trade on Thursday to $6.23.

RBC Capital Markets said in a note to clients that Kelsian’s move showed discipline.

“As management has stated, we think KLS will continue to be on the front foot looking for acquisition opportunities,’’ RBC said.

“At the right price we believe this a good strategy, but note that this adds execution risk to the strategy.

“Thus we believe management must adopt a disciplined approach, particularly in overseas markets. KLS has previously described the UK market as ‘highly competitive’, and sold its East London bus operations whilst also vending its West London operations into a joint venture in late 2021.

“So today’s announcements highlights to us that they are remaining disciplined and unwilling to pursue opportunities at any price.’’

RBC has a price target of $6 on the stock.

Kelsian said it reserved the right to return with a bid for Go-Ahead should certain conditions be met, for example should the current bid be withdrawn.