Kinetic and Globalvia Inversiones have reached a deal to buy transport company Go-Ahead in the UK for about $1.5bn.
The consortium trumped the Australian listed Kelsian Group in the contest to buy the business.
Kelsian urged Go-Ahead shareholders in a statement on Tuesday to take no action over the Kinetic offer after it also launched a buyout proposal for the transport company, suggesting another approach could be made.
Yet most believe that a major equity raising would be needed by Kelsian to fund the deal and the volatile market conditions means this is not an option for the $1.6bn Australian listed group.
Chief executive Clint Feuerherdt said that if Kelsian made an offer for Go-Ahead, it could bring to bear its operating expertise to accelerate Go-Ahead’s growth in the UK, creating value for Kelsian shareholders.
The Kinetic-led consortium raised its offer over night to beat the local Kelsian.
The consortium won the contest to buy the business with a bid of STG15 per share including a 50p dividend payment.
It is understood negotiations went through the night with the consortium raising its offer five times before it was accepted by the company’s board, taking the market value of the offer to STG647.7m (AUD$1.13bn), or STG850m including debt (AUD$1.49bn).
Canadian pension fund manager OPTrust and Australia based Infrastructure Capital Group own Kinetic, while OPTrust also owns part of Spanish infrastructure manager Globalvia.
Go-Ahead is one of Britain’s major public transport companies with a bus and rail network with a fleet of more than 6000 buses across England and responsible for a quarter of London’s buses for Transport for London.
It also operates in Singapore, Ireland, Sweden, Norway and Germany.
It made an announcement on Monday morning in the UK that it had received two buyout proposals, one being from Kelsian and another from Kinetic and Globalvia Inversiones.
Go Ahead said that the offers were at a level that would be recommended by the company’s board should the parties put forward formal proposals, and both bidders had been given due diligence.
Kinetic has 4000 buses and 6000 employes and is Australia and New Zealand’s largest bus network and operator of battery electric buses.
Working for Go-Ahead is advisory firm Rothschild while the buyers of Kinetic are advised by UBS.
Go-Ahead has faced challenges recently linked to disclosure, where it lost a rail contract after failing to declare STG25m of government funding.
It is also experiencing cuts in public transport services in London.
The company launched a new strategy last year after appointing a new chief executive.
Go-Ahead is one of the three major bus operators in the UK.
The others are Stagecoach and FirstGroup, both of which have had bids from DWS and iSquared respectively.
The UK transport sector is in strong demand from suitors in the aftermath of the pandemic.
Kelsian Group provides land and marine tourism as well as public transport services in Australia, Singapore and the United Kingdom.
The company, previously called Sealink Travel, made a big splash in the public transport space about three years ago when it purchased Transit Systems Group for $635m.
However, it has missed out on assets in recent contests.
Kelsian was thought to be in the mix in the sales process for Ritchies, which has 23 per cent of the New Zealand market share.
It showed interest in NZ Bus but it was sold to Kinetic by Next Capital earlier this year.
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