WILL ARRIVA EXPAND IN THE WEST MIDLANDS?

[Bob]

does anyone think they will start more services? after all other than the 560 & 1 theres nothing left of the Chase routes they inherited, which is a shame and at 14 vehicles the new west brom operations are a bit piecemeal

[winston]

Arriva must surely be plotting something with setting up the new depot at West Bromwich. can't imagine they are making much money from the Centro tenders. It may be they are dipping a toe in the NXWM heartland to get a feel for the operating area. Alternatively, rather than take the risk of setting up new commercial services no doubt against NXWM, they may choose to go down the acquisition route i.e. Rotala or Midland and use the already established business as a platform to build from

[Bob]

maybe but chase was a very long established service and look what happened there, all the classic Nationals replaced with shitty awful old B6s/darts then the routes disappeared

[Bob]

do you think rotala or midland would sell up?

[nx4737]

do you think rotala or midland would sell up?

Depends how much cash they're making and how much Arriva are offering I suppose...

[Bob]

hmmmm yea i spose & midland in my opinion have got a shitty fleet of old darts & solos so they cant be worth that much..

[andy]

It is marketplace, revenue/profitability, property and contracts that play a large part in the value a bus company, vehicles don't always come into it, otherwise Arriva wouldn't have paid for Wardles who had a similar fleet to Midland.

[Bob]

Hmmmm yea i spose as Wardle had just bought the north staffs operations of D & G bringing in the similar fleet to Midland

[Badger]

Fleets are easily changeable and not really a solid part of a bus company. Although I would have thought Diamond and Midland would be perhaps easier for Arriva to take over since they use the same buses as Arriva (pointer Darts), making the transition easier (or am I talking bull?). I don't want to see Midland go mind, and their fleet isn't that bad.

[winston]

do you think rotala or midland would sell up?

If the price was right both could be interested in selling up, Rotala are now a plc with approx 53% of the issued share capital held by private individuals including John Gunn (26.5%) The Dunn Family (4.49%) and Geoffrey Flight (Formerly Flights Coaches 3.76%), if a suitable offer was forthcoming, they would have to disclose it to the London Stock Exchange and put it to the vote. It may be Arriva could acquire a controlling stake to give Rotala access to additional finance / group purchasing power on vehicles / fuel etc Alternatively Arriva could acquire a minority stake if John Gunn aged 69 was looking to retire etc, Arriva could then take full control / become the majority shareholder through additional share purchases on the stock exchange.  Rotala don't make fantastic profit margins to re-invest in the business / expand, its West Midlands based bus business has been contracting in size the past couple of years, although the group can raise additional funds for expansion / new vehicle purchases via issuing additional shares in the group as they have done in the past, this dilutes existing share holdings.

http://www.rotalaplc.com/#/shareholder-analysis/4547826985

Midland is privately owned by David Reeves & possibly Julian Peddle may still own a stake I believe? Again it may depend on how old David Reeves it and what his plans are for the future, he could decide to sell up to release his investment and stay on as MD to run the business under another owner. Similar to what a number of smaller operators in East Anglia / Essex have done with the Go-Ahead group i.e. Anglian / Chambers / Hedingham etc. Smaller bus companies are finding increasingly more difficult to make decent returns / break even due to ever increasing insurance costs / high fuel prices & cuts in BSOG
Anything is possible in the current climate.

As regards the current fleets of Rotala or Midland, the fleet makeup is pretty irrelevant. Any group the size of Arriva or any of the others can easily transfer in buses from existing subsidiaries or new vehicles from group orders

[PM]

Maybe Arriva could take over Rotala as they did TGM-ie retain it as a smaller subsidary group. TGM-like Rotala-didnt make huge profits etc and there would be no CC/MMC/OFT issues. Dont forget also that first may sell Midland Red and Arriva could well wish to buy this. Also, dont forget Stagecoach. I imagine that they wouldnt mind a share of the WM action although acquisition of Rotala would raise the whole Preston issue again.

[andy]

Interesting stuf Winston, I would think Julian Peddle is still counting his money from the last time Arriva relieved him of a company!

[winston]

Maybe Arriva could take over Rotala as they did TGM-ie retain it as a smaller subsidary group. TGM-like Rotala-didnt make huge profits etc and there would be no CC/MMC/OFT issues. Dont forget also that first may sell Midland Red and Arriva could well wish to buy this. Also, dont forget Stagecoach. I imagine that they wouldnt mind a share of the WM action although acquisition of Rotala would raise the whole Preston issue again.

Or the same way as Arriva have retaining the Wardles brand and are running it as a seperate business within Arriva group. Yes there will be another round of First Group disposals / closures etc. FMR has rarely featured on any of the potential disposal lists that I've seen online, I think Worcester & Hereford at least makes good returns, but Kidderminster & Redditch garages may not be the most profitable. Generally it's always Devon & Cornwall, Northampton, Scotland East, London, & parts of East Anglia / Essex which keep cropping up.

I think you could rule out Stagecoach being interested in Rotala, they have had more than enough opportunities to takeover BCC / Pete's Travel prior to Go-Ahead acquisitions & then again when Go-ahead wanted out & sold to Rotala. Stagecoach have / will always have its sights set on the NXWM bus business, they lost out to the Employee buyout bid for WMT even though they offered more money & more recently tried to do a side deal with the Cosmen Family to buy NX group UK bus business when NX group was sinking under a mountain of debt. Stagecoach then tried again unsuccessfully to go it alone & takeover the entire NX group after the CVC / Cosmen bid collapsed due to CVC pulling out, they must have got quite close to pulling it off due to NXWM suspending NX repaints and instead painting vehicles allover white. Stagecoach are only interested in the star prize i.e. NXWM
   

[D10]

In First's submission to the Competition Commission inquiry they revealed that of their then Midlands operations only Worcester and Leicester made a profit, the other garages i.e Kidderminster, Redditch, Hereford and Northampton did not. So I wonder if Arriva made an offer then there would be a good chunk of business available to them.

[winston]

In First's submission to the Competition Commission inquiry they revealed that of their then Midlands operations only Worcester and Leicester made a profit, the other garages i.e Kidderminster, Redditch, Hereford and Northampton did not. So I wonder if Arriva made an offer then there would be a good chunk of business available to them.

Thanks for that D10; I had wrongly thought that Hereford was profitable but obviously not. It has also been suggested that First may also have to also dispose of profitable garages along with loss making ones to wrap them up as a package, thus making them more interesting to prospective purchasers and hopefully a better purchase price achieved. Apparently the disposal programme is to be speeded up, so hopefully those areas on the disposal list should become known sooner rather than later

It has even been suggested First South Yorkshire Olive grove depot or the entire group could be disposed of, as Stagecoach are wiping the floor with them at the moment, however it's not surprising as First have invested little in the FSY fleet over the last few years, some of those that were brought new have been shipped to Glasgow while more recently 10 Gemini's have gone to York to replace Streetcars. I understand however from the South Yorkshire forum that may been given 12 months to improve its performance & may be receiving new investment to give them a fighting chance