FirstGroup bids for rival rail firm

FirstGroup currently runs three rail franchises

Transport firm FirstGroup has unveiled an agreed takeover bid for rival rail operator GB Railways.

The offer could rise to as much as 500p per share, depending on how successful GB Railways is in winning new contracts for rail franchises.

GB is currently on the shortlist for the new Greater Anglia franchise, which will include both the Great Eastern and Anglia Railways operations.

First Group currently operates the Great Eastern franchise, but failed to make it onto the Greater Anglia shortlist.

It had started legal action against the Strategic Rail Authority (SRA) after being blocked from bidding for the new franchise, but has since dropped the action.

'Excellent fit'

FirstGroup's offer involves an initial payment of 250p per share, with a further 200p being paid if GB Railways succeeds in winning the Greater Anglia contract.

Shareholders will get an additional 50p per share if GB also wins two more franchises - Wales & Borders and Northern.

FirstGroup's offer has been approved by GB's board although it still needs to be backed by the company's shareholders.

GB Railways currently operates Anglia Railways, Hull Trains and GB Railfreight.

In addition to the Great Eastern franchise, FirstGroup also operates the Great Western and North Western franchises.

"This acquisition will make an excellent fit with our current rail business, re-opening new opportunities in East Anglia and Wales, giving us access to the East Coast main line and introducing us to the rail freight market," said FirstGroup chief executive Moir Lockhead.