FirstGroup goes sightseeing in London and Bath

FirstGroup has acquired RATP Développement’s Tootbus sightseeing operations in London and Bath for about £17m, adding 63 buses, depots in Wandsworth and Keynsham, and 190 staff, including the Bath–Bristol Air Decker service. Management says the deal is part of a UK-focused growth and diversification plan that will create operational and cost synergies and help expand its London route portfolio; it follows a £90m RATP Dev purchase earlier this year that established First Bus London with 83 TfL routes (c.12% market share). The business ran an approximately £600k operating loss last year and is expected to remain loss-making in year one, but FirstGroup forecasts c.£30m of revenue by 2029, while analysts note the Wandsworth freehold depot can be repurposed to bid for additional TfL routes and improve asset utilisation.

Analysis

FirstGroup has acquired RATP Développement’s Tootbus sightseeing operations in London and Bath for about £17m, adding 63 buses, depots in Wandsworth and Keynsham and 190 staff, including the Bath–Bristol Air Decker service. CEO Graham Sutherland frames the purchase as part of a UK-focused growth and diversification strategy intended to deliver operational and cost synergies and expand First Bus’s London route portfolio.

This follows a prior £90m RATP Dev deal earlier this year that established First Bus London with 83 TfL routes (around 12% market share), supporting the view that the group can execute inorganic growth in the London market; Peel Hunt characterises the sightseeing deal as diversification and better utilisation of underused assets rather than aggressive network expansion. The large freehold depot in Wandsworth is a strategic asset that can be repurposed to bid for additional TfL contracts, increasing optionality beyond tourist services.

The acquired sightseeing business recorded roughly a £600k operating loss last year and is expected to remain loss-making in its first year under FirstGroup, while management projects c.£30m of revenue by 2029. Market signals are mildly positive (sentiment ~0.28, FGP ~0.3) reflecting modest optimism about synergies and asset leverage, but near-term profitability and integration execution remain the primary risks to value creation.

Key Decisions for Investors

• Monitor integration milestones and synergy realization metrics over the next 12 months and reassess exposure if operating losses persist, Watch for concrete signs of depot repurposing and successful TfL route bids as these will materially de-risk the growth story, Consider a selective buy or add to positions only after evidence of revenue traction or cost-synergy delivery given the projected first-year loss and the multi-year horizon to £30m revenue, Use position size management or hedges to limit downside while awaiting proof points on occupancy/utilisation and profitability