The board of Aberdeen transport company FirstGroup has turned down a takeover bid worth up to £1.23billion.
The offer was from private equity group I Squared Capital.
At the end of last month, FirstGroup confirmed that it had received a series of unsolicited, conditional proposals from I Squared.
The latest proposal received on May 25 provided for a cash component of 118p per share and a contingent right of up to a further 45.6p per share.
But FirstGroup said yesterday: "The board, having carefully evaluated the proposal together with its advisers, concluded that the cash component of 118p per share significantly undervalues FirstGroup's continuing operations and its future prospects, and the contingent right to up to 45.6p per share does not provide shareholders with sufficient certainty.
"Accordingly, the board has unanimously rejected the proposal."
FirstGroup finally appointed a new boss in April - several months after its last chief executive left amid pressure from an activist investor.
Graham Sutherland's spent 12 years at BT where he held several senior positions, including chief executive of the BT business and public sector division.
The 58-year-old Scot was also chief executive of KCOM Group, a telecommunications company, from 2018 until its sale to a Macquarie-managed infrastructure fund a year later.
The company had been without a chief executive since last September, when Matthew Gregory left after Coast Capital, an American hedge fund that was then the biggest shareholder, criticised his competency and said that he should go.
Mr Gregory's final act was to deliver the £3.3billion sale of most of FirstGroup's US business, including its yellow school buses.
It was reported in April that Coast had been agitating for the group to be split up, but was not impressed by the deal as investors shared only £500million of the proceeds.
Mr Sutherland, who hails from Inverness, is the company's fourth CEO since Sir Moir Lockhead led a buyout of Grampian Transport in 1989 to found the firm.
FirstGroup's current operation include First Bus, the second-largest regional bus operator in the UK. It serves two-thirds of the UK's 15 largest conurbations, including Glasgow, Bristol and Leeds, and has a fifth of the market outside London.
The company also has First Rail, the UK's largest rail operator. It runs four Government-contracted operations - Avanti, GWR, SWR, TPE - and open access operations Hull Trains and Lumo.
FirstGroup shares closed yesterday down just over 1% at 135p.
FTSE 100
The UK's top share index, the FTSE 100, slipped 24 points to 7,452 shortly after opening this morning, following yesterday's 116-point plunge as traders fretted about European Central Bank interest rates.
Brent crude futures were marginally in the red at $122.71 a barrel.
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