Stagecoach to make £20m London acquisition
Stagecoach has entered into binding agreements to acquire Kelsian Group‘s Tower Transit east London bus operations and depot at Lea Interchange for a total consideration of £20m.
Upon completion, £10m will be payable, with a further £1m per annum payable for ten years commencing on the first anniversary following completion, subject to certain conditions.
Stagecoach believes the acquisition is a good strategic fit with its existing operations in east and south-east London.
Lea Interchange depot is located close to Stratford, the busiest station in the UK. It operates 11 TfL contracts using a fleet of around 150 buses, with an annual turnover of around £38m. According to Stagecoach, there are opportunities to improve operational performance from the site and grow contract margins as routes are retendered. It says the acquired depot provides a platform for it to bid for new contracts in the area over the short and medium term.
The deal plays part of Kelsian Group’s repositioning in the UK transport market, which it plans will provide a strategic platform for potential UK and European expansion opportunities.
Kelsian will continue to participate in the London bus market via its 12.5% stake in the RATP Dev Transit London joint venture and its ongoing 100% freehold interest in the Westbourne Park bus depot.
“This targeted acquisition provides operational and margin improvement opportunities that we have successfully delivered at our other London bus depots” – Martin Griffiths, Stagecoach Chief Executive
Martin Griffiths, Stagecoach Chief Executive, said: “We have an extensive track-record of operating high-quality and profitable bus services on behalf of Transport for London.
“This targeted acquisition provides operational and margin improvement opportunities that we have successfully delivered at our other London bus depots.
“We look forward to working with TfL to deliver even better bus links to local communities in east London and also helping support the Mayor’s drive to deliver a net zero transport system.”
The acquisition is planned to be complete by late June 2022.