FirstGroup agrees to purchase RATP Dev Transit London business – routeone

FirstGroup is set to return to the Transport for London (TfL) contracted bus market after reaching a binding agreement to purchase of RATP Dev Transit London and its subsidiaries London United Busways, London Sovereign and London Transit for £90 million.

Completion is expected in H1 2025 following approval from current ultimate owner the French government. The deal will bring around 12% of the TfL red bus market along with 10 depots in central and west London, 982 buses – of which a third are battery-electric – and in the region of 3,700 staff.

RATP Dev Transit London reported revenues of £271 million for the year to 31 December 2023. That figure is expected to grow to £300-350 million over the coming five years. £45m towards the purchase will be from FirstGroup cash reserves with the remainder representing assumption of RATP London’s asset-backed finance leases.

The business has 90 TfL route contracts along with what FirstGroup says is “an experienced management team with a proven record of developing and implementing a comprehensive turnaround plan that includes enhanced bid discipline and improved operational and cost performance.”

Those leaders are expected to transfer and remain in post after the acquisition. FirstGroup notes that the turnaround plan has been developed over the past three years and has included early termination of lossmaking routes at contract review dates, as well as better operational performance and cost control, and workforce stabilisation.

The 10 depots that form part of the expected deal include Westbourne Park. It was formerly part of First London until that operation was split and sold in 2013, initially becoming part of Tower Transit.

Acquisition of RATP Dev Transit London will further build the FirstGroup coach and bus presence within the M25. In early 2023 it purchased Purfleet-based Ensignbus while in October 2024, coach operator Anderson Travel, based near Tower Bridge, followed suit.

Speaking about the expected deal, FirstGroup Chief Executive Officer Graham Sutherland says: “This is a significant acquisition for the group that will diversify our portfolio and materially grow our earnings in the medium-term.

“It allows us to enter the London bus market at scale and will also bolster our credentials as we participate in future franchising opportunities across the UK. We look forward to continuing to build on our relationship with TfL and to welcoming RATP London’s employees into the group, to continue the transformation of the business, and to capitalise on the growth potential in the London market.”

FirstGroup has identified “a number of synergies that could further enhance profitability” of RATP Dev Transit London including purchasing activities, merging some back-office functions, and the financing of zero-emission buses.

Following closure of the deal, RATP Dev will focus its resources on urban rail globally, Deputy CEO and member of the Executive Board Mehdi Sinaceur says.

“We are confident that FirstGroup, with its wide-ranging expertise and commitment to driving model shift and leading in social and environmental sustainability, is the ideal partner to support RATP Dev Transit London’s continued success and contribute to sustainable transportation in London.”