FIRSTGROUP (FGP) – Travel & Leisure
| Price: 187p +1.9% | P/E: 9.5x |
| Market Cap: £1bn | Yield: 3.8% |
FirstGroup has acquired the UK sightseeing bus operations of French firm RATP for £17 million to grow and diversify its business.
The RATP assets include 63 buses, 42 in London and 21 in Bath, as well as a large freehold depot in Wandsworth and a leased depot in Bath, plus the Airdecker bus service between Bath and Bristol airport.
Our View
It may not move the needle much, butr this looks like a shrewd deal as it not only bolsters the group’s offering but adding the Wandsworth depot will bring operational efficiencies and improve profitability, and FGP can now bid for additional TfL red bus routes run from the depot.
Just yesterday the firm was named as the preferred operator for the London Underground suburban rail network for an eight-year term starting next May, a contract potentially worth around £3 billion.
The difference between FGP and MOBICO (MCG), the old National Express, couldn’t be starker. One is worth £1 billion and is focused on growth, the other is worth £140 million and is selling assets to keep the lights on. No question which one we prefer.
Read the press release here: https://www.firstgroupplc.com/investors.aspx
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