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pyuek; spot on.
daimler; spot on that; particularly with regard to the top heavy management - you didn't mention the duplication, particularly in their rail franchisees. This is predominantly because of the structure of the rail franchising system, which requires that each franchise is run at arms length - which means each of GWR, Avanti and Transpennine ALL have their own chief executive, chief financial officer, HR departements, recruitment departments etc. Whilst the contracts restrict their ability to centralise, garner economies of scale, i do think they could do more; on a more positive note, the 2 franchises in my area they run are at near pre pandemic levels. I can't speak for the buses, but train wise, the new govt contracts have reduced all the risk, and only left upside; the new franchise Avanti (previously Virgin/Stagecoach), made £50 million in the last year of its previous franchisee, who was adept at 'financial engineering', so i don't think the target meeting performance potential of this franchise is currently factored into the FGP price.
Transport company's will now be taking a close look at past and present agreements. I am pretty sure FG will have nothing to worry about and that when the dust settles all will be fine.
One of my concerns with FG taking over other struggling company's is that FG are not good at this, they would run it separate to the rest of the company, keep all the managers office staff and probably spend a fortune on the vehicles bringing them up-to FG standard.
It is hard to believe this is an oversight you know how many miles you are running , and do not change this without serious consideration.
I also think FG has become top heavy, When they decide to put building maintenance and building cleaning and vehicle (train or bus )cleaning and god knows what else out to tender you never see the reduction in management who had to manage these areas.
All that without a single mention of a cake. " DOH almost "
The £25m relates to track access charges for access to the HS1 part of the Southeastern network. Usually all track access charges (a toll charge for using the track) are levied by Network Rail who own most of the uk rail network. The HS1 section is privately owned and they levy their own version of the track access charge. As part of the franchise agreement DfT agreed to contribute a fixed amount towards the charge however if the actual charges were less than the agreed amount (they ran less trains) Southeastern were to return the surplus to DfT which they didn't. As a result its a situation unique to the Southeastern franchise but as others have said its the reputation damage thats key.
Daimler, no doubt this weeks news has upset the apple cart. GOG are now in serious trouble as their reputation is in shreds. There is probably even more of a case therefore for consolidation, but only if FGP can purchase GOG assets without taking on liability for any SFO investigation (must be absolute red line). I suspect opportunities will open themselves up over the next few months to either get their assets at a knocked down price, take on their lucrative routes or even buy the whole thing if the red line noted above is not crossed. The benefits are huge, currently we spend most of our profits on management costs, almost all of which we see very little for. With the company just becoming UK based the existing management structure is too large and expensive, either needs to be slimmed down or the UK operations expanded. In light of the current situation at GOG I wouldn’t suggest they blindly bid for it without understanding the mess they are getting themselves into, but there are opportunities out there for that £400m of cash that is probably better than their current mechanism to return the money to shareholders. If shareholders want their cash they can sell their shares!
Pyueck your post 21 09 21 you said first group should use the £ 500 000 000 to buy Go ahead when they were 915.5 they are now 735.65 that is a drop of 20% or a 1/5 of a cake( that's a fat wedge )or if the cake had 100 candles that would be down to 80 candles.
That £500 000 000 would now be worth £400 000 000.
This latest news has upset the apple cart. I can see big changes regarding franchise and subsidy.
You can see a logic in buying GOG from a geographical fit point of view. Until it is known in detail what future bus services will look like and how they will be subsidised, I would be nervous of any aquisitions! Happily support organic growth for the foreseeable future and agree GOG's demise may present opportunities.
SFO is getting involved over there so best not to jump in. Puts FGP in a stronger position for franchise wins IMO
All travel stocks taking a beating today, Knock on effect of GOG. Agree make a bid for GOG might even help my shares recover lol
Management should scrap the odd cash payout mechanism and buy go-ahead instead at these rock bottom prices. Go-Ahead will struggle to win many new contracts with today's news hanging over them but as part of FGP this shouldn't be an issue. If FGP wants to really transform and add value to shareholders forget about the paltry 40p payout and buy Go-Ahead now, there will be no better opportunity.
Tom and Jerry This deal is the opposite to a rights issue. Your comment " S.P. will react and be close to the tender offer on the open market". Well said, spot on that is how it will play out in my opinion.
Printing shares ( rights issue has a very negative affect on the S.P. and the value usually ends up reducing by the same amount as the discount.) buying shares back should increase the value of the S.P. by say upto 41 p depending on number returned, in the long term 6 to 12 months in my opinion.
Have a look at just Google favion for some answers,
If only it was as simple as a cake in a tin.
Good luck everybody
PYUECK
If I had a share certificate 1000 shares in one pocket and a share certificate in the other pocket for 2000 shares what would I have.
Somebody else's trousers.
We will find out soon enough lets all chill and not expect to make a penny, lets just enjoy the ride.
I am in at about 100 made massive investment in January at about 75 to lower my average.
In my opinion 100 is still a good price and company looking good at the moment. I do not expect to be disappointed.
When are FGP going to get around to actually telling us how this is all going to work, let alone implementing it?
FGP’s total value/MC will fall by the amount of distribution but SP will be higher than current price due to the number of shares in circulation will be reduced upon taking the offer.
Also, SP will react and will be closed to the tender offer on the open market.
Most of the PIs including myself will take the offer immediately but IIs will continue to hold for larger gains in long term
Daimler, your logic doesn't add up. Simple example:
A cake box is worth £10 because the cake is worth £7.50 and it also has £2.50 of cash in it. The cake box is owned by 100 shares each currently are worth 10p. All shares are owned by one person. The shareholder agrees to receive 10p a share for 25 shares.
How much is the cake box worth after the shareholder received 10p a share for 25 shares? The answer is £7.50 as the £2.50 is no longer in the cake box. You were making the mistake of forgetting that (in theory) FGP's valuation should fall by the amount distributed to shareholders.
I do not think you will be limited to one hundred shares that example was just for Loofer 1.
There may be a limit regarding the number of shares you can sell at the premium price.
The premium price may be more or less than plus 41p per share,
You may have to wait for premium payment who knows .
Loofer 1
Way I understand it is They make you an offer at 41p above market value so you sell. You can then buy one hundred shares back at market price 88.4 p.
100 shares at 129.4p = £129.40 you can buy them back same day at market price £88.40.
£41 profit for every one hundred shares you sell and then buy back.
We need the details obviously .
"favicon" have a read very unusual .
Raises more questions .
Thriller that is not true FGP will be one of the best capitalised, no make that the best capitalised UK transport companies out there.
Even then fgp get there cash settlement there still going to be in massive debt. I don't think buying another bus company with more det will help
Interesting news on the National Express / Stagecoach transaction. National Express is far and away the best run of the UK rail/bus operators and there are definitely benefits from the transaction through shared management costs and efficiencies of scale.
With the disposal of the US operations maybe Firstgroup should consider something similar. The obvious target is Go Ahead or maybe also Stagecoach. We are about to be returned £500m of cash in a seemingly very messy way, all whilst reducing debt. Maybe we should be snapping up one of these companies with this cash instead.
I didn't like the US sale transaction as the price was too low and I think shareholders will live to regret it. However if the UK operations are to be a success then we probably need even more scale and consolidation of management (oh and the head office really need to move from Aberdeen as whilst I love the city it is a big blocker to recruiting talent and pushes up travel costs).
They said Autumn for distribution, that's before end of Nov by my reckoning. Before that we need the terms of distribution and process published, so in the next few weeks is when we find out hopefully.
One thing you can be sure of with First, We are going to be disappointed.
find out soon enough I hope. I don't think any timeline has been suggested yet. Meanwhile the SP slips away
Imv the II 's will not allow shares bought back to be held in treasury as FGP could in future reissue to raise capital, with appropriate agreements, this would dilute their holding and the SP. The purpose of the buyback is to return wealth to the shareholders and support a higher SP. The level of the future SP will be underpinned by future profits and subsequent dividend payments. We will find out soon enough!
Let's just think this through...
Say I have a shareholding of 100 shares, valued at £90
So ex-div the market price is say 90p and they announce 100p offer.
Everybody agrees to take up the offer so the pot of £500mn has finished, no special dividend due.
The day after ex-div, as is the norm, share price drops by the dividend/premium amount. So drops to 80p.
A week later i get payout from FGP of 41 * 100p = £41.0
Say I use cash to immediately buy 41 (41% of my original holding) shares again at 80p on the market costing £32.80 - so they're back to same holding of 100 shares.
my 100 shares @ 80p... £80 plus £8.20 cash = £88.20
My math is wrong somewhere as it doesn't look appealing??
now if FGP were to cancel all the 500m shares they bought, that would pretty much double share price