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Post by Deleted on Apr 7, 2008 17:35:27 GMT
I do not know where this bit about being unprofitable came from, Stagecoaches London operations were very profitable - Macquarie Bank paid a lot of money for what was Stagecoach London, which if I remember correctly valued Stagecoach London at 22% of the market capitalisation of the whole company, and would imagine any cost cutting exercises, are a way to increase profitably to justify the huge expense they out laid.
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Post by Deleted on Apr 7, 2008 18:14:57 GMT
We've just lost the 202's as you know , we've had it for years and done a very good job, Metrobus put in a lower bid and won it ... I dont understand whats going on , when the 96's result comes up who would bet on us retaining it .... not me thats for sure. Oh and of course then theres the 472's result due soon aswell , things dont look good do they !
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Post by john on Apr 7, 2008 21:36:26 GMT
Didn't Selkent start losing routes under Stagecoach too though?
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Post by Deleted on Apr 7, 2008 22:49:14 GMT
We've just lost the 202's as you know , we've had it for years and done a very good job, Metrobus put in a lower bid and won it ... I dont understand whats going on , when the 96's result comes up who would bet on us retaining it .... not me thats for sure. Oh and of course then theres the 472's result due soon aswell , things dont look good do they ! Easy... u gained the 248 and those other routes in Bromley and lost the 453. Sense TFL playing games here for the operating parties?
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Post by john on Apr 7, 2008 23:04:20 GMT
Well the 248 was an East London route, while the routes that ELBG are losing are all Selkent routes. In fact, East London is pretty much at capacity!!! There's only a handful of routes that they haven't got, most probably because they don't want them!!!
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Post by ServerKing on Apr 8, 2008 5:58:44 GMT
Selkent will get new buses for the 177 soon, and East London ones for the 106. TBH I'm surprised no other company has tried to buy ELBG. I don't think a bank should own it, there's been little investment in the buses so far (aside from one Euro4 engine in one of the 17xxx's)
I read in Buses magazine that Stagecoach in Huddersfield sold their garage (or want to sell it) to Arriva. So I guess it's interesting times, and we'll see what happens. They can't change all the company names back, that's a long t'ing... ;D
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Post by Deleted on Apr 8, 2008 10:10:40 GMT
Macquarie have bought the companies as an investment large banks to this all the time, as long as the are getting what they require as an acceptable% return on the investment they will probably keep it until a great offer comes along , or the cost of fuel etc keeps rising and may force the profits down , so may offer it for sale. Stagecoach are doing quite well in other areas at the moment so if they were willing to sell shares im sure there would be plenty of investors out there willing to part with some cash. I may be wrong on this but with go-ahead being quite sucessful recently purchasing BT and docklands as well as winning additional work through LC/LG and metrobus purchasing the orpington operation how much more Tfl work can they take on as i believe there is a limit to the % of the network yo can operate.
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Post by Deleted on Apr 8, 2008 16:56:52 GMT
I do not know where this bit about being unprofitable came from, Stagecoaches London operations were very profitable - Macquarie Bank paid a lot of money for what was Stagecoach London, which if I remember correctly valued Stagecoach London at 22% of the market capitalisation of the whole company, and would imagine any cost cutting exercises, are a way to increase profitably to justify the huge expense they out laid. You dont sell highly profitable companies. Well not unless you are straped for cash. My understanding and that was what was given out by Stagecoach was that East London was considerably underperforming
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Post by Deleted on Apr 8, 2008 16:59:47 GMT
We've just lost the 202's as you know , we've had it for years and done a very good job, Metrobus put in a lower bid and won it ... I dont understand whats going on , when the 96's result comes up who would bet on us retaining it .... not me thats for sure. Oh and of course then theres the 472's result due soon aswell , things dont look good do they ! Easy... u gained the 248 and those other routes in Bromley and lost the 453. Sense TFL playing games here for the operating parties? You cannot normally play games with tenders of you risk running foul of the law. Basically a tender has to be awarded to whover makes the best bid. If you dont except the best bid you have to jusify why not and that decision at least could possibly be challenged in the courts so I doubt TfL just play games. Its an expensive business submitting tenders.
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Post by Deleted on Apr 8, 2008 17:05:09 GMT
Macquarie have bought the companies as an investment large banks to this all the time, as long as the are getting what they require as an acceptable% return on the investment they will probably keep it until a great offer comes along , or the cost of fuel etc keeps rising and may force the profits down , so may offer it for sale. Stagecoach are doing quite well in other areas at the moment so if they were willing to sell shares im sure there would be plenty of investors out there willing to part with some cash. I may be wrong on this but with go-ahead being quite sucessful recently purchasing BT and docklands as well as winning additional work through LC/LG and metrobus purchasing the orpington operation how much more Tfl work can they take on as i believe there is a limit to the % of the network yo can operate. There is a limit to the percentage of work a company can have in an area. It largly comes under what I think is called the competition commision (these things keep getting there names changed) Increasingly they are stepping in where takover take place although in many areas of the UK there is already pretty much a total monopoly. I belive they are looking at ways to get more competition
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Post by Deleted on Apr 9, 2008 6:44:11 GMT
You dont sell highly profitable companies. Well not unless you are straped for cash. My understanding and that was what was given out by Stagecoach was that East London was considerably underperforming You do if the offer is considered to be in the shareholders best interest - ie the offer is so much more than it's real value. Can you please point me to this `Stagecoach quote` that says they were under performing
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Post by Deleted on Apr 9, 2008 10:05:28 GMT
You dont sell highly profitable companies. Well not unless you are straped for cash. My understanding and that was what was given out by Stagecoach was that East London was considerably underperforming
Stagecoach was formed over 25 years ago, and in no way is this disrespect to messrs souter and gloag, but they have been highly successful in their business ventures and none of us are getting any younger maybe they just want to sell their shares and look forward to enjoying a retirement?
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Post by john on Apr 9, 2008 13:11:21 GMT
Makes good business sense to see one of the companies LESS performing divisions and earn some money out of it, even if it was performing really well. Common cost and management accounting practices well if one division doesn't contribute enough to the company, then they get rid
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Post by Deleted on Apr 9, 2008 17:11:24 GMT
I do not know where this bit about being unprofitable came from, Stagecoaches London operations were very profitable - Macquarie Bank paid a lot of money for what was Stagecoach London, which if I remember correctly valued Stagecoach London at 22% of the market capitalisation of the whole company, and would imagine any cost cutting exercises, are a way to increase profitably to justify the huge expense they out laid. The figures clearly showed they were one of the worst performing Stagecoach business units. You are I thing confusing Market Capitalisation & profitability. Just because a company has a high Market capitalisation does not mean it is profitable. The two are very different things
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Post by Deleted on Apr 9, 2008 17:41:21 GMT
Here is the press announcement
Stagecoach sells London bus operations to Macquarie for 263.6 mln stg UPDATE
(adds comment from spokesman, detail from statement, background) LONDON (AFX) - Bus and rail operator Stagecoach Group PLC said it is selling its London bus operations to Australian investment group Macquarie Bank Ltd for 263.6 mln stg. Stagecoach said it plans to focus on its bus operations outside London following the sale of Stagecoach London, whose two operating companies run contracts mainly for the capital's transport authority Transport for London (TfL). Stagecoach chief executive Brian Souter said the group had concluded that the disposal would be in the best interests of its shareholders after assessing Macquarie's offer "and the prospects for the London bus operations". A spokesman described the offer from Macquarie as attractive. Stagecoach has said previously that although it believes the London bus market offers further growth potential, it would be slower than in the past. "The sale of the London bus business will allow us to focus on our successful UK bus growth strategy outside London, where we have demonstrated our strength in delivering innovation, investment and strong marketing," Souter said. "We will continue to look for further organic growth and bolt-on acquisition opportunities in our UK and North American bus business and opportunities to grow our rail portfolio." During the last year, Stagecoach has bought what it describes as "significant" bus operations in Merseyside, Yorkshire, Lincolnshire and Tayside. The group said it expects to complete the sale of Stagecoach London, which is subject to regulatory approval, approval by TfL and other closing conditions, within three months. It said the London division's management, led by managing director designate Nigel Barrett, would remain with the company under its new owner. The unit runs about 1,300 buses and employs around 4,300 staff. Stagecoach said it would continue to provide certain administrative and other services to Stagecoach London for a transitional period of at least 12 months and will allow Stagecoach London to use the Stagecoach name under licence for a limited period. The company said it expects to make an estimated consolidated gain on disposal of about 120 mln stg, although that would depend on the final determination of the net assets of Stagecoach London at completion of the sale. It said it would initially use the proceeds of the sale, after making extra pension contributions of about 60 mln stg, to reduce borrowings. Stagecoach is due to report full year results next Wednesday. philip.waller@afxnews.com paw/slm
1) The fact it was sold for £263m would mean it was profitable 2) The fact they expected to make an estimated consolidated gain on disposal of about 120 mln stg means they valued the London Opeartion at £143m - if some was prepared to pay nearly double your valuation - would you sell 3) The quote "it believes the London bus market offers further growth potential, it would be slower than in the past" indicate that Stagecoach believe the London markets has peaked, and so would be getting top dollar
Highly profitable companies are sold regularly. If the price offered exceed the anticipated profit over the next x years - the offer is good so you have to sell - that is market forces
I have yet to see any type of near official announcement that indicated Stagecoach London was losing money - and the price paid by MacQuarrie certainly not indicate this
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