Breakingviews - Go-Ahead investors can afford to wait for next bus - Reuters.com

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A Go-Ahead bus crosses Westminster Bridge in London, Britain August 29, 2015. REUTERS/Neil Hall/File Photo

LONDON, June 14 (Reuters Breakingviews) - Like London buses, UK transport deals are arriving all at once, putting shareholders firmly in the driving seat. Last week, rail operator FirstGroup (FGP.L) spurned a 1.2 billion pound approach from private equity outfit I Squared Capital. Now, Australia’s Kinetic and Spain’s Globalvia are hopping aboard a joint 648 million pound bid for rival rail and road firm Go-Ahead (GOG.L). Nor are they alone. Kelsian (KLS.AX), a $1 billion listed transport provider from Down Under, is sharpening its elbows as well.

With so much choice, Go-Ahead investors would be ill-advised to jump too soon. Kinetic-Globalvia’s 15-pounds-a-share bid is a modest 24% premium to Go-Ahead’s close on Friday evening, and a third below the stock’s pre-pandemic levels. At 6 times next year’s EBITDA, it’s broadly in line with FirstGroup’s recently rebuffed offer, and only marginally ahead of the 5.6 times multiple rolled out for struggling rival Stagecoach (SGC.L) last year. On Tuesday, Go-Ahead shares were trading more than 3% above the offer. If the duo want to complete the trip, they may have to pay a steeper fare. (By Ed Cropley)

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Editing by George Hay and Streisand Neto

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