FirstGroup PLC — M&A Activity 2021

Oct 28, 2021

Guide to the Tender Offer for Qualifying Shareholders issued with Tender Forms Important information – please study carefully

Unless the context otherwise requires, words and expressions defined in the circular published by FirstGroup plc (the "Company") on 27 October 2021 in relation to the Tender Offer (the "Circular") shall have the same meanings in this guide. This guide is not a summary of the Circular or the Tender Form and should not be regarded as a substitute for reading (and recipients of this guide should read) the Circular and Tender Form in full.

If you are in any doubt as to the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or other appropriate independent financial adviser duly authorised under the Financial Services and Markets Act 2000 if you are resident in the United Kingdom or, if not, from another appropriately authorised independent financial adviser.

None of the Company, its Directors, officers, employees or advisers or their respective affiliates makes any recommendation to any Qualifying Shareholder whether to tender or refrain from tendering any or all of its, his or her Ordinary Shares in the Tender Offer, and none of them has authorised any person to make any such recommendation. Shareholders are urged to evaluate carefully all information in the Circular and the Tender Form, consult their own investment and tax advisers and make their own decisions as to whether to tender Ordinary Shares, and, if so, the number of Ordinary Shares to tender.

The availability of the Tender Offer to Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdiction in which they are located. Shareholders who are not resident in the United Kingdom should read paragraph 6 of Part IV (Details of the Tender Offer) of the Circular and should inform themselves about, and observe, any applicable legal or regulatory requirements. In addition, the attention of Shareholders who are resident in the United States is drawn to the Notice for US Shareholders on page 3 of the Circular.

The Tender Offer is not being made, directly or indirectly, in or into, or by use of the mails of, or by any means or instrumentality (including, without limitation, facsimile transmission, telex, telephone and email) of interstate or foreign commerce of, or any facilities of a national securities exchange of, any Restricted Jurisdiction and the Tender Offer cannot be accepted by any such use, means, instrumentality or facility or from within any Restricted Jurisdiction. Accordingly, unless otherwise determined by the Company and permitted by applicable law and regulation, neither the Circular nor the Tender Form nor any related document is being, nor may it be, directly or indirectly, mailed, transmitted or otherwise forwarded, distributed, or sent in, into or from any Restricted Jurisdiction, and persons receiving the Circular, the Tender Form and/or any related document (including, without limitation, trustees, nominees or custodians) must not mail or otherwise forward, distribute or send it in, into or from such Restricted Jurisdiction, as to do so may invalidate any purported acceptance of the Tender Offer. Any person (including, without limitation, trustees, nominees or custodians) who would or otherwise intends to, or who may have a contractual or legal obligation to, forward the Circular, the Tender Form and/or any related document to any jurisdiction outside the United Kingdom, should seek appropriate advice before taking any action.

The Tender Offer is conditional on approval from Shareholders of certain matters, which is being sought at the General Meeting. Notice of the General Meeting to be held at Queen Elizabeth II Centre, Broad Sanctuary, Westminster, London, SW1P 3EE at 11.00 a.m. on 18 November 2021 is set out at the end of the Circular. The Company is intending to hold the General Meeting as a physical meeting. However, the Company will be closely monitoring the restrictions over public gatherings and the UK Government's safety guidance in light of the COVID-19 pandemic. Any Shareholders and proxies attending the General Meeting in person will be asked to provide a proof of identity and either (i) a NHS Covid Pass using the NHS app on their mobile phone; or (ii) written evidence of a negative lateral flow test taken within 24 hours of the time of the General Meeting or a PCR test taken within 48 hours of the time of the General Meeting. Any changes to the General Meeting arrangements will be communicated to Shareholders before the meeting through the Company's website (www.firstgroupplc.com) and, where appropriate, by RIS announcement. The Company will also be making arrangements to enable Shareholders to watch a live stream of the proceedings during the General Meeting. Further details on these arrangements are set out in the Notice of General Meeting at the end of the Circular.

Qualifying Shareholders should not tender their Ordinary Shares except on the basis of information in the Circular and Tender Form.

The Tender Form should only be used to tender Ordinary Shares held in certificated form. Different procedures apply to tender Ordinary Shares held in uncertificated form, which are explained at paragraph 3.3 of Part IV (Details of Tender Offer) of the Circular.

PART A | What is happening?

FirstGroup completed the sale of First Student and First Transit to EQT Infrastructure on 21 July 2021 and in return received net disposal proceeds of \$3.123 billion (the "Net Disposal Proceeds"). FirstGroup has committed to return £500 million of the Net Disposal Proceeds to Shareholders, and is pursuing a Tender Offer in order to carry out this return. This is why you have been contacted now.

The Tender Offer is a means for Qualifying Shareholders to sell all or some of their Ordinary Shares for purchase by Goldman Sachs. There are then option arrangements in place that allow Goldman Sachs or FirstGroup to ensure the sale of those Ordinary Shares by Goldman Sachs to FirstGroup. You are not obliged to tender any Ordinary Shares if you do not wish to do so. Full details of the Tender Offer are set out in the Circular. There is an explanation of what the Tender Offer is in Part B of this guide.

If the full amount of £500 million is not returned to Shareholders through the Tender Offer, FirstGroup intends to undertake a second phase of the Return of Value to return such surplus to Shareholders. If there is sufficient surplus, the Board will return up to approximately £50 million of the balance by way of a share buyback, with any meaningful surplus above this amount to be returned by way of a special dividend.

What is in this pack?

Circular

The Circular has been prepared in compliance with the requirements of the Listing Rules and sets out the background to and benefits of the Tender Offer as well as its terms and conditions. The Tender Offer and related matters require the approval of Shareholders. A General Meeting is being convened for 11.00 a.m. on 18 November 2021 at Queen Elizabeth II Centre, Broad Sanctuary, Westminster, London, SW1P 3EE for this purpose. You must read the Circular and you should seek appropriate advice if any of the information in the Circular is not clear.

Tender Form and pre-paid reply envelope

The Tender Form sets out the options available to you to participate in the Tender Offer, if you wish to do so. You must complete and return the Tender Form if you hold Ordinary Shares in certificated form and you wish to participate in the Tender Offer.

A pre-paid reply envelope to return your Tender Form is enclosed (for use if you are posting your Tender Form within the United Kingdom). If you are outside the United Kingdom (but not within a Restricted Jurisdiction), you will need to send your Tender Form to Equiniti, Corporate Actions, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA.

If you wish to tender any Ordinary Shares, please return your Tender so as to be received by not later than 1.00 p.m. on 29 November 2021. Tender Forms returned after 1.00 p.m. on 29 November 2021 will be treated as invalid.

If you hold Ordinary Shares in uncertificated form (that is, in CREST) and you wish to participate in the Tender Offer, different procedures apply. These are set out in the Circular.

Form of Proxy and pre-paid reply envelope

Unless you have opted to appoint a proxy via electronic means, a Form of Proxy to be used in connection with the General Meeting is enclosed in this pack, together with a pre-paid reply envelope for returning your completed Form of Proxy (for use if you are posting your Form of Proxy within the United Kingdom). If you are outside the United Kingdom, you will need to send your Form of Proxy to Equiniti, Corporate Actions, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA.

Completed Forms of Proxy must be received by not later than 11.00 a.m. on 16 November 2021 (or, in the case of an adjournment, not later than 48 hours (excluding non-Business Days) before the time fixed for the holding of the adjourned meeting).

Likewise, if you choose to submit a proxy appointment electronically at www.sharevote.co.uk or www.shareview.co.uk, you must ensure that the appointment is received by no later than 11.00 a.m. on 16 November 2021 (or, in the case of an adjournment, not later than 48 hours (excluding non-Business Days) before the time fixed for the holding of the adjourned meeting).

What should I do now?

Please complete and return your Form of Proxy in accordance with the instructions printed on it or submit a proxy appointment electronically at www.sharevote.co.uk or www.shareview.co.uk.

You should read the Circular, the Tender Form and this guide carefully. Should anything in these documents not be clear, you should seek separate advice or contact the Shareholder Helpline, details of which are set out on the final page of this guide.

You have three options to consider in relation to the Tender Offer:

Option 1: tender none of your Ordinary Shares Option 2: tender some of your Ordinary Shares Option 3: tender all of your Ordinary Shares

If, after carefully considering the Circular, you intend to take Option 1, you do not need to take any action.

If, after carefully considering the Circular, you intend to take Option 2 or Option 3, you must submit the completed Tender Form to Equiniti so as to be received by not later than 1.00 p.m. on 29 November 2021. Tender Forms returned after 1.00 p.m. on 29 November 2021 will be treated as invalid.

Timetable

The following key dates and times should be considered when assessing your options. Each of the times and dates in the table below is indicative only and may be subject to change by FirstGroup, in which event details of the new times and dates will be notified to Shareholders by announcement through a Regulatory Information Service.

Tender Offer opens	28 October 2021
Latest time and date for receipt of Forms of Proxy for the General Meeting (to vote on the Tender Offer and related matters)	11.00 a.m. on 16 November 2021
General Meeting (shareholder vote on the Tender Offer and related matters)	11.00 a.m. on 18 November 2021
Latest time and date for receipt of Tender Forms and share certificates or other documents of title for tendered certificated Ordinary Shares (i.e. close of the Tender Offer)	1.00 p.m. on 29 November 2021
Record Date for the Tender Offer (the time and date used to calculate how many Ordinary Shares you are entitled to tender)	6.00 p.m. on 29 November 2021
Announcement of the results of the Tender Offer	2 December 2021
Unconditional Date for the Tender Offer and purchase of Ordinary Shares under the Tender Offer	2 December 2021
Cheques despatched in respect of Tender Offer proceeds for certificated Ordinary Shares	16 December 2021
Return of share certificates in respect of unsuccessful tenders of certificated Ordinary Shares	16 December 2021
Despatch of balance share certificates in respect of unsold Ordinary Shares in certificated form	16 December 2021
Notes:

1. All references to times in the timetable above are to London times.

Assistance

Should anything in these documents not be clear, you should seek separate advice or contact the Shareholder Helpline, details of which are set out on the final page of this guide.

PART B | About the Tender Offer

What is the Tender Offer?

The Tender Offer provides an opportunity for Qualifying Shareholders to tender (meaning offer to sell) some or all of their Ordinary Shares for purchase by Goldman Sachs at a price of 105 pence per Ordinary Share.

The Tender Price under the Tender Offer represents a premium of 12.4 per cent. to the closing price of 93.4 pence per Ordinary Share on the Latest Practicable Date and represents a premium of 16.9 per cent. to the volume weighted average price per Ordinary Share over the one month to the Latest Practicable Date.

The Tender Offer requires shareholder approval. A General Meeting has been convened for 18 November 2021 to seek approval to proceed with the Tender Offer.

Please see Part IV (Details of the Tender Offer) of the Circular for further details on the Tender Offer. If the Tender Offer is approved, you can choose to tender none, some or all of your Ordinary Shares.

The total number of Ordinary Shares tendered should not exceed the total number of Ordinary Shares that you hold at 6.00 p.m. on 29 November 2021 (the "Record Date").

In the event that more than £500 million of Ordinary Shares are tendered to FirstGroup, all Ordinary shares validly tendered up to the Guaranteed Entitlement, for each relevant holding of Ordinary Shares, will be accepted and purchased in full. Additionally, all Ordinary Shares validly tendered in excess of the Guaranteed Entitlement, for each relevant holding of Ordinary Shares, will be scaled down pro rata to the total number of such Ordinary Shares tendered in excess of the Guaranteed Entitlement such that the total cost of Ordinary Shares to be purchased pursuant to the Tender Offer does not exceed £500 million. Please see paragraphs 2.13 to 2.15 of Part IV (Details of the Tender Offer) of the Circular for further details on the Guaranteed Entitlement.

In the event that the full £500 million is not returned to Shareholders through the Tender Offer, FirstGroup intends to undertake a second phase of the Return of Value to return such surplus to Shareholders. If there is sufficient surplus, the Board will return up to approximately £50 million of the balance by way of a share buyback, with any meaningful surplus above this amount to be returned by way of a special dividend.

Why the Tender Offer rather than an alternate method to return value to shareholders?

FirstGroup has considered the different ways of returning the £500 million to Shareholders, and has consulted with Shareholders on the different methods which are typically used to do so.

Following that consideration and consultation, the Board concluded that a Tender Offer made at an appropriate premium to the price per share of Ordinary Shares on the Latest Practicable Date, is the best way to return a significant amount of capital to Shareholders in a short space of time, taking account of the relative costs, complexity and timeframes of the various possible methods, as well as the likely tax treatment for Shareholders.

A share buyback programme provides choice for shareholders in much the same way as a tender offer. However, the Tender Offer provides a faster route to return surplus capital to Shareholders than repurchasing Ordinary Shares in the market through a share buyback programme. Also, unlike a share buyback programme, the Tender Offer facilitates the participation of all Qualifying Shareholders rather than just principally institutional market participants.

In addition, if FirstGroup were to return the £500 million via a special dividend, all Shareholders would receive a cash amount per Ordinary Share. This route would not provide Shareholders with a choice as to whether to receive cash or how much. The Tender Offer allows Qualifying Shareholders to choose whether to receive no cash and retain what will be an increased proportion of the share capital of FirstGroup (via Option 1) or to receive cash for such number of their Ordinary Shares as they choose to tender (via Option 2 or Option 3). Qualifying Shareholders can choose the best individual outcome based on their own needs and tax position.

What else should I know about participating in the Tender Offer?

Tenders are irrevocable once made. If you choose to participate in the Tender Offer, during the Tender Offer period you should not sell to a third party buyer the Ordinary Shares that you are tendering.

What if I do not participate in the Tender Offer?

If you do not participate in the Tender Offer, you will not receive any cash.

Following completion of the Tender Offer, the purchased Ordinary Shares will be cancelled. As a result, there will be fewer Ordinary Shares in issue and each Ordinary Share will represent a greater proportion of the total issued share capital of FirstGroup. Assuming earnings remain the same, the Tender Offer should have a positive impact on the Group's earnings per share.

Will I sell all the Ordinary Shares that I tender?

There can be no certainty that any or all of the Ordinary Shares that you tender will be accepted for purchase in the Tender Offer. The Tender offer may be oversubscribed, in which case, only the Ordinary Shares up to each holdings Guaranteed Entitlement will be acquired in full at the Tender Price and will not be scaled down.

Will I receive dividends on the Ordinary Shares that I tender?

You will not be eligible for any future dividends announced by FirstGroup in respect of any Ordinary Shares that you successfully tender.

PART C | Your options and how to take them up

Option 1: tender NONE of your Ordinary Shares

If, after carefully considering the Circular, you intend to take up Option 1, you do not need to take any action.

Option 2 or Option 3: tender SOME or ALL of your Ordinary Shares

If, after carefully considering the Circular, you intend to take Option 2 or Option 3, you must submit the completed Tender Form to Equiniti so as to be received by Equiniti no later than 1.00 p.m. on 29 November 2021. Tender Forms returned after 1.00 p.m. on 29 November 2021 will be treated as invalid.

If you hold your Ordinary Shares in uncertificated form (that is, in CREST) and you wish to participate in the Tender Offer, different procedures apply. These are set out in the Circular.

Qualifying Shareholders who hold Ordinary Shares in certificated form and wish to participate in the Tender Offer should refer to the guidance on how to complete the Tender Form set out on the following page of this guide.

STEP-BY-STEP GUIDE TO COMPLETING A TENDER FORM FOR QUALIFYING SHAREHOLDERS WHO WISH TO TENDER ORDINARY SHARES HELD IN CERTIFICATED FORM

Shareholder Information

• Check that your name and address and contact telephone number are printed correctly in Box 1
• Box A sets out the total number of Ordinary Shares $\mathcal{L}$ recorded against your name(s) on the register of
  members of the Company at 6.00 p.m. on 25 October 2021. This is provided for information purposes only.
• Please provide a daytime telephone number in Box
  C and a contact email address in Box B. $\mathbf{q}$

IF YOU WISH TO TENDER ORDINARY SHARES, YOU MUST RETURN YOUR TENDER
FORM SO AS TO BE EXAMPLE RECEIVED NO LATER
THAN 1.00 P.M. ON 29
NOVEMBER 2021

DO NOT COMPLETE AND RETURN THIS FORM IF YOU DO NOT WISH TO TENDER ANY
ORDINARY SHARES PLEASE FILL IN THIS FORM IN BLOCK CAPITALS IF YOU WISH TO
TENDER ORDINARY SHARES on and Tender If you wish to tender your Guaranteed Entitlement, place a cross in Box 1A. Box 1A $B$ _DX 1B $\overline{R}$ nber to return your Share certificate(s) and/or other document(s) of title or (where ap
respect of the tendered Ordinary Shares equal to or in excess of the a n, Ordinary Shares as indicated in Box 1A or Box 1B ab
n as a deed by an individual / by a compa $\angle$ . Execution as a deed by an individual / by a company
IMPORTANT. Each Shareboider who is an individual MUST Sich in The PRESENCE OF AN INDEPENDENT WITNESS who must ALSO
SORN and print his or her name and addess where 3. Change of address / Alternative address
34 $\Box$ Tick Box 3A if you are advising of a new / co
38 $\Box$ Tick Box 3B if you are advising of an alternative on or re

Indicate a preferred alternative correspondence address

.
this box if this Tender Form is a replacement Tender For

House House
Code $\Box$ PI

Any documents enclosed with your Tender Form will be returned to you at the address of the sole or first-named registered holder in Box 1, along with any cheque in payment for successfully tender Ordinary Shares.

Please complete Box 3 to indicate the address, if different
from that printed in Box 1, for the Registrar to send any such documents or cheques to you.

Ordinary Shares tendered

Please insert a cross in Box 1A if you wish to
tender your Guaranteed Entitlement. If you wish $\overline{1}$ to tender a different number of Ordinary Shares (if any) to your Guaranteed Entitlement, insert the
number of Ordinary Shares you wish to tender in Box $1_B$

$\overline{\mathbf{2}}$

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$\overline{2}$ Remember to return your Share certificate(s) and/or other document(s) of title or (where applicable) a satisfactory indemnity in lieu thereof in respect of the sausiaction principal Shares equal to or in respect of the
tendered Ordinary Shares equal to or in excess of the
amount you wish to tender. If you are unable provide
the Share certificate(s) and/ or other documents of
titl

Sign the Tender Form

• Box 2A: Each individual shareholder must sign in the presence of a witness, who must also sign, date and indicate their address in the space provided. The witness must be over 18 years of age and must
  not be one of the joint registered holders or
  otherwise have any financial interest in the relevant
  Ordinary Shares or in the proceeds resulting from the execution of this Tender Form. The same
  person may witness the signature of each joint holder. Please see Note 1 on page 5 of the Tender Form where a power of attorney has been granted or a registered holder is away from home, and
  Notes 2 and 3 on page 5 if the sole registered
  holder, or any joint holder, has died.
• $\sigma$ Box 2B: A company incorporated in England and Wales or Scotland may affix its common seal, which should also be witnessed in accordance with its articles of association or other applicable regulation.
  Alternatively, a company to which the Companies
  Act 2006 applies may execute the Tender Form as a deed by two directors or by one director in the presence of a witness. If the holder is a company
  incorporated outside the UK, it may sign in accordance with the laws of its jurisdiction of incorporation.

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PART D | Your main questions answered

Part II (Questions and Answers on the Return of Value) of the Circular contains some principal questions and answers to help you understand what is involved in the Tender Offer.

If after reading this guide, together with the Circular and Tender Form, you have any further questions, please contact the Shareholder Helpline on 0333 207 6537 or +44 333 207 6537 (if calling from outside the UK) between the hours of 8.30 a.m. and 5.30 p.m. (London time) Monday to Friday (excluding UK public holidays). Please note that calls to the Shareholder Helpline numbers may be monitored or recorded. Calls are charged at the standard geographic rate and will vary by provider. Calls from outside the UK will be charged at the applicable international rate. Please note that, for legal reasons, the Shareholder Helpline will only be able to provide information contained in the Circular and the accompanying Tender Form and will be unable to give advice on the merits of the Tender Offer or to provide financial, investment or taxation advice.