LONDON: FirstGroup plc has announced its acquisition of RATP Dev Transit London Limited and its subsidiaries from RATP Développement SA for an enterprise value of £90 million. This strategic move marks FirstGroup’s entry into the competitive London bus market with a strong position.

RATP London, one of the leading bus operators in the capital, holds a 12% market share and operates 10 depots across Central and West London. The company boasts a fleet of approximately 1,000 buses, a third of which are fully electric, and employs around 3,700 staff, with over 80% being drivers. RATP London manages about 90 Transport for London route contracts, generating revenues of £271 million in the year ending December 31, 2023.

The acquisition is underpinned by substantial physical assets worth around £100 million, including £50 million in freehold property. FirstGroup will finance the deal using £45 million from its cash reserves and will assume RATP London’s asset-backed vehicle finance leases valued at approximately £45 million.

Post-acquisition, FirstGroup expects the deal to be earnings neutral for FY 2025 and FY 2026, with revenues projected to grow to £300-350 million annually over the next five years. Operating margins are anticipated to align with historical London levels of 6-7%. The company has also identified potential synergies to further enhance profitability.

The current management team of RATP London will remain with the business, and the acquisition is subject to approval from the French government and Transport for London’s consent to the change of control. The deal is expected to be finalized in the first half of 2025.

With this acquisition, FirstGroup aims to expand and diversify its revenue streams while solidifying its presence in one of the world’s most dynamic urban transport markets.

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