Arriva's future?

[winston]

Why would they want Rotala? They apparently were/are losing money on all their West Midlands commercial services if their press releases are to be believed. And the areas they are dominant in like Preston, Redditch and Kidderminster are hardly fertile ground for significant future growth - there is a reason why the larger groups got rid of these operations! Perhaps if they had won any of the larger Greater Manchester contracts you'd have a point but I just do not see them as an attractive proposition for any of the larger companies as they would require significant investment in those areas without any guarantee in these uncertain times.

With the struggles of the bus industry in recent years, mergers are far more likely than takeovers anyway, less risk in the long run and no significant initial outlay having to purchase instead of merge.

Rotala could provide them with a low entry cost / established operation in the West Midlands & surrounding counties, leaving Arriva well positioned should franchising be considered here. The competing 4 / 4H Rotala & NX services are been rationalised from the 1st week of November switching to being operated in partnership. That is Diamond's largest Pvr route, both operators will see Pvr savings. 
The small Bee Network franchises that Rotala have already won are at very good rates & there's still Tranche 3 to be awarded (The largest round yet with 5 large depots), including Arriva Wythenshawe depot. 
Rotala's Heathrow operation is also very profitable. 

I haven't seen any evidence of these mergers you say are far more likely than takeovers:

Stagecoach Group - Acquired by DWS
Go-Ahead Group - Acquired by Kinetic & Global via
Arriva Group - Being Acquired by I Squared Capital

[j789]

Rotala could provide them with a low entry cost / established operation in the West Midlands & surrounding counties, leaving Arriva well positioned should franchising be considered here. The competing 4 / 4H Rotala & NX services are been rationalised from the 1st week of November switching to being operated in partnership. That is Diamond's largest Pvr route, both operators will see Pvr savings.
The small Bee Network franchises that Rotala have already won are at very good rates & there's still Tranche 3 to be awarded (The largest round yet with 5 large depots), including Arriva Wythenshawe depot.
Rotala's Heathrow operation is also very profitable.

I haven't seen any evidence of these mergers you say are far more likely than takeovers:

Stagecoach Group - Acquired by DWS
Go-Ahead Group - Acquired by Kinetic & Global via
Arriva Group - Being Acquired by I Squared Capital

Stagecoach and Arriva sales were linked to declining income and poor performance (compared to previous years) hence the reason for selling. Had both companies sold pre-covid at the top of their games they would have gone for far more money than these recent sales bought in. It is very likely both operators will also see further rationalisation of services and operating territory in areas where there is limited profitability. Why then would anyone want to add operations like Kidderminster and Redditch to their portfolio when it's areas like this that those larger companies want to get rid of?

The situation in Greater Manchester also does not give absolute security as even if winning a larger contract, there is always a risk it's lost at the next round of tendering in a few years.

Diamond's West Mids operations are minuscule compared to NX as the dominant operator. They are not in a good place to compete should franchising happen (which hopefully it won't!). They do not have the resources currently (drivers, garages, etc) to operate on a larger scale and the recent significant driver pay increases at NX mean that 'tupe'ed'  drivers (who would be a necessity in obtaining to drive the routes won) would have a huge bearing on profitability potential in the future. As would having to purchase the garages from NX.

Go Ahead we're in a far better position 15 years back to make a go of it with Diamond yet they still couldn't get the profitability to work for them as a larger company. Some operations are best left in the hands of the smaller companies like Rotala who can make it work for them. However, Arriva and similar want the 'bigger picture' now, not small scale operations with limited upscale potential.

Additionally, the financial outlay for these larger companies, to purchase the West Mids operations of Rotala, wouldn't be cheap and probably not massively different to the costs of just starting up their own new West Mids operation themselves and avoiding any need for a takeover in the first place!

[Stu]

WMT isn't the crown jewel it once was.

Although, I Squared Capital could potentially bid for the entire Mobico Group or even Rotala.

That is true, at this present time.

I would guess it would depend on who has the greater 'foresight'.

I2C is focused on "energy, utilities, telecom and transport", so are clearly investing in "what will be important" in the near future.

Bus franchising is going to expand in the next few years, and this will mainly benefit the 'big groups' as the commercial risk passes on to taxpayers.

Mobico could be tempted with a cash offer to offload West Midlands Travel, if they want a short-term fix to reduce losses. Or they themselves might hang onto this business if they're happy to see what unfolds in the long-term.

Equally, the new owners of Arriva could just sit back and wait for the franchise opportunity to arise in the West Midlands, and they could gain a lot more with less investment.