FirstGroup, the London Stock Exchange-listed transportation business, has rejected a takeover approach from Apollo Global Management.

FirstGroup stated that the “preliminary and highly conditional indicative proposal” from Apollo’s ninth fund “fundamentally undervalues the company and is opportunistic in nature”.

The target currently has a market cap of around £1.34bn (€1.54bn). The stock has risen sharply since late March as speculation of a takeover has mounted.

In February, FirstGroup reduced its earnings outlook for the year citing increased competition from airlines in the US. It also undertook a refinancing which reduced borrowing costs.

FirstGroup carries around two billion passengers every year across its various divisions. It operates around one-fifth of all deregulated bus services outside London and the Great Western, South Western and TransPennine Express rail franchises.

The company is also the largest provider of student transport in North America and operates the US inter-city Greyhound bus network.

FirstGroup has turnover of around £5.7bn and employs 100,000 people.

Goldman Sachs and JP Morgan Cazenove are advising FirstGroup.