FirstGroup (LSE: FGP) expands in London and Bath: What’s the real impact of the Tootbus deal?

FirstGroup plc (LSE: FGP) has moved decisively to expand its presence in the UK bus market by acquiring the sightseeing operations of RATP Développement SA—best known to tourists as Tootbus—in a deal valued at approximately £17 million. This acquisition gives FirstGroup immediate access to a fresh segment within London’s transport ecosystem, as well as new operational leverage in Bath, setting up the group for long-term strategic growth. The move, announced on December 11, 2025, is not just another fleet expansion, but a calculated bet on sector diversification at a time when urban mobility is rapidly evolving and competition among major bus operators is heating up.

Tootbus, which operates 63 buses across London and Bath and employs around 190 staff, is widely regarded as a creative force in UK sightseeing, known for digitized customer experiences and decarbonization initiatives. FirstGroup’s integration of the business, including a valuable Wandsworth depot, signals a tactical push to boost efficiency and chase profitability across its First Bus division. For institutional investors, this deal arrives as FirstGroup shares are staging a sharp rebound: the stock has climbed 1.47 percent to 186.50 GBX as of December 11, 2025, shaking off a volatile quarter and prompting a fresh round of attention from analysts tracking the FTSE 250 transport group.

How does the acquisition of Tootbus transform FirstGroup’s growth and diversification strategy in London and Bath?

This acquisition is emblematic of FirstGroup’s sharpened UK-centric growth playbook. By purchasing one of London’s top five sightseeing operators, FirstGroup instantly broadens its service footprint beyond conventional commuter routes, entering a tourism-focused niche with clear upside for revenue diversification. The Wandsworth freehold depot gives the group new operational flexibility, both for sightseeing and future bids for Transport for London (TfL) red bus routes. In Bath, the acquisition adds scale and depot capacity to FirstGroup’s West of England operations, complementing its existing bus network and capturing additional tourist and airport transfer flows through services like Airdecker.

From a financial perspective, the Tootbus UK operations generated £15.9 million in revenue but posted a modest operating loss of £0.6 million for the year ending December 2023. FirstGroup’s leadership is betting that, with operational synergies and efficiency improvements, these businesses will swing back into profitability after an initial transition period. The group is projecting annual revenue from these operations to reach around £30 million by the 2029 fiscal year, partly fueled by anticipated wins in London’s contract bus market.

What operational changes and synergies are expected from integrating Tootbus with First Bus?

The integration is expected to yield substantial operational and cost synergies. FirstGroup’s strategy is to leverage the additional depot capacity—especially the prized Wandsworth site—to optimize both sightseeing and commuter operations. With Bill Cahill, Managing Director of First Bus London, and Doug Claringbold, Managing Director of First Bus West of England, overseeing the integration, the company expects to unlock efficiencies through shared management, resource pooling, and more dynamic scheduling.

FirstGroup is also planning to bid for more TfL red bus routes from the expanded depot footprint, a move that could strengthen its contract base in one of the UK’s most lucrative and regulated bus markets. Analysts believe this approach positions FirstGroup to buffer against volatility in commuter demand while capitalizing on the robust recovery of the UK tourism sector—a trend that has been fueling higher occupancy rates for sightseeing services post-pandemic.

What does the deal reveal about RATP Dev’s international strategy and the future of Tootbus?

For RATP Dev, the sale is consistent with a global pivot toward multimodal operations and major rail projects across its international portfolio. The Tootbus brand will remain active in the UK for at least the next 12 months under a Transitional Service Agreement, during which FirstGroup will rely on the existing teams to ensure seamless continuity for staff and customers. RATP Dev continues to operate Tootbus sightseeing services in Paris and Brussels, and is focusing future investments on urban rail, metro automation, and expansion into new geographies.

RATP Dev executives have expressed pride in Tootbus UK’s progress—particularly in sustainability, as the fleet relies heavily on electric and clean-fuel buses—and confidence that FirstGroup will maintain the brand’s momentum. Sector observers expect this transitional year to serve as a test case for how legacy brands can evolve under new ownership without losing their creative edge or operational excellence.

What is the outlook for FirstGroup’s balance sheet and debt profile after this acquisition?

The £17 million transaction will be financed entirely from FirstGroup’s existing cash reserves, demonstrating both the company’s healthy liquidity position and its ability to make strategic investments without diluting shareholders. As a result of the acquisition, FirstGroup now expects its adjusted net debt to end FY 2026 in the range of £140 million to £150 million, a figure that remains manageable given the group’s cash generation profile and recent operational turnaround.

Analysts tracking FirstGroup’s financials have noted that the company’s debt load has trended lower over recent years, supported by disciplined capital allocation and steady growth in core bus and rail franchises. This latest move signals a willingness to deploy capital for bolt-on acquisitions that reinforce the group’s competitive edge.

How are institutional investors and analysts responding to FirstGroup’s latest acquisition, and what does recent stock performance indicate?

The market’s immediate reaction to the deal has been positive. Shares of FirstGroup plc rose by 1.47 percent on the day of the announcement, recovering from recent lows and reflecting renewed confidence in the management’s growth strategy. The stock’s one-year performance, as visualized in trading data, reveals a strong rally from early 2025 lows to a midyear peak above 220 GBX, followed by a correction and subsequent bounce into December.

Institutional sentiment appears cautiously optimistic, with many buy-side analysts viewing the move as an effective way to capture new revenue streams and improve asset utilization, especially in a highly regulated market like London. The fact that the acquisition was cash-financed, and that initial integration losses are expected to be modest, has also reassured investors wary of overleveraged balance sheets in the sector.

What are the key challenges and opportunities for FirstGroup as it integrates Tootbus and targets long-term growth?

While FirstGroup’s roadmap looks robust, the acquisition is not without risks. The UK sightseeing market, particularly in London, is intensely competitive, with at least five major operators vying for tourist traffic and corporate bookings. Successfully refocusing and optimizing the acquired businesses will require careful execution, especially as FirstGroup looks to ramp up contract wins from its expanded London depot network. Transition costs, short-term losses, and the complexities of integrating diverse employee groups and legacy technology platforms all pose challenges.

However, the underlying opportunity is compelling. As the UK’s capital returns to pre-pandemic levels of inbound tourism and as consumers seek eco-friendly transport options, FirstGroup stands to benefit from both volume growth and its leadership in clean-fuel fleet operations. The group’s existing reputation in scheduled urban transport gives it a springboard to cross-sell, innovate, and ultimately shape the next wave of urban mobility experiences in London and Bath.

Key takeaways from FirstGroup’s Tootbus acquisition and future market outlook

• FirstGroup plc has acquired the UK sightseeing bus operations of RATP Développement SA (Tootbus) for about £17 million, boosting its London and Bath footprint.
• The deal covers 63 buses, 190 staff, and two depots, giving FirstGroup new operational leverage and access to tourist-focused routes.
• The business is expected to initially post minor losses, but FirstGroup aims for profitability and around £30 million in annual revenue by FY 2029.
• Institutional sentiment is positive, with FirstGroup shares up 1.47 percent after the news and analysts praising the diversification strategy.
• Integration synergies will focus on operational efficiency, TfL contract bidding, and maximizing depot capacity.
• The deal is cash-financed, with expected net debt rising to £140–150 million by FY 2026, seen as sustainable by most analysts.
• RATP Dev will focus on international rail and multimodal projects, with Tootbus UK continuing under its brand for a transition period.
• The acquisition fits a broader industry trend of legacy transport operators targeting tourism, sustainability, and flexible fleet management.
• Challenges include London’s competitive sightseeing market and the operational complexities of integrating new staff and assets.
• The move positions FirstGroup to capitalize on the UK tourism rebound, decarbonization momentum, and potential growth in London bus contracts.