Post by Deleted on Apr 10, 2008 5:36:07 GMT
steve517757 said:
Here is the press announcementStagecoach 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
You are still misunderstanding things. The Sales value of a company is no indication of its profitability or not.
I did not say East London was loosing money. It was considerably underforming ie it was not delivering the level of profitability it expected. They also anticipated little growth in the London market which would further suppress profitability.
The fact that they made a profit on the sales would be normal. Any sale Would have to be in the best interests of the shareholders. If no premium is payed it would be difficult for the directors to say that it was in the shareholders interests.
By selling the under forming London interests it released assets that could be ploughed back into better performing parts of the business.
Macquarie are basically a banking /investment business. They will buy up underperfoming businesses, turn them around and sell them on.. They probably saw a chance to buy the Stagecoach London operations at a low price they will then go into a cost cutting exercise to get the profitability up and will then look for an opportunity to sell