For Sale

[PM]

Whittle will be able to buy kidderminster as the MMC and OFT are ok with smaller groups buying things. Also, Johnsons could buy Redditch tho do diamond honestly want Redditch-how would they be able to make a profit where First failed. Stagecoach will persuade them in Northampton that it cant survive on its own and anyway its only 30 buses. Rotala will be fine to buy things-they are a profitable company and are one of the parties who is extremely interested in the sale of these bus companies. It should definitely not be ruled out and I would predict it buying at least one company in this series of sales.

[PM]

Also, apparently Bristol are also on the market and the list given earlier is certainly not exhaustive-theyll sell anything at the right price. Which bits do we reckon RATP and Go-Ahead are interested in? My bets would be Chester, Wigan and Northampton-which could be made to work with some investment.

[PM]

I have a feeling this thread will not die out anytime soon tho!! ;D

[Tony]

Whittle will be able to buy kidderminster as the MMC and OFT are ok with smaller groups buying things. Also, Johnsons could buy Redditch tho do diamond honestly want Redditch-how would they be able to make a profit where First failed. Stagecoach will persuade them in Northampton that it cant survive on its own and anyway its only 30 buses. Rotala will be fine to buy things-they are a profitable company and are one of the parties who is extremely interested in the sale of these bus companies. It should definitely not be ruled out and I would predict it buying at least one company in this series of sales.

Just because they are a profitable company doesn't mean they would be able to 'buy things' and how do you know they are 'extremely interested' has they issued a statement to the stock exchange? I think not.

Rotala are a profitable company with some quite large debts, nothing wrong with that, Stagecoach & National Express are similar, but to buy another operation would mean they would have to raise the money to do that. They already have PrestonBus 'mortgaged' to pay for the purchase. They also owe their major shareholders some quite large sums they have loaned and profits will be servicing these debts. To raise the capital to purchase anyone else they would have to borrow money against the assetts (as per PrestonBus) and you would need a lender willing to do that against Redditch (not as easy as Preston specially the way the banks are now). You could issue more shares, but you have to find someone willing to buy those shares and it also devalues the existing shares, so may not please existing shareholders. You could issue bonds, as NatEx did to manage their debt, but you have to be able to guarantee a return. They could borrow more money of the shareholders, who they already owe large amounts to, or you could just do a straight bank loan, not cheap even if they are willing to do it!

I am not saying Rotala cannot or will not buy one or both of Kidderminster and Redditch, just stating it is may not be as easy as you seem to be saying it is.

[PM]

AIM-listed Rotala are expected to take a close look at First's 'for sale' list and they are described as fast expanding if you look at the link at the top of the page. I dont think thinking about it that theyd want Redditch or Kidderminster. Not prime bus territory and I wouldnt be surprised if they ceased operations in Redditch anyway. Theyd be more interested in Chester, Wigan or Northampton, particularly when they mentioned that the north would be a hub for regional expansion after they bought Preston. I think that they are the real ones to watch and if theyre careful, wont face the MMC's wrath. And this leads me on to a point. Dont you just hate the MMC? Theyd rather see no buses than one company with a dominance of the market. Whilst this is not ideal, surely it is better than no buses and the local authority having to foot the bill for lots of supported services?

[Roy]

I think Wigan being put up for sale has surprised a few, one that I expected to be on the list & isn't is First Devon & Cornwall,

I was in Cornwall recently and the trend of the past few years where First conceded large parts of the county (particularly mid and north Cornwall) to Western Greyhound seems to have been stemmed, even though they are still using buses of very dubious vintage.  First seem to be making an effort to expand services having outbid Western Greyhound for a number of County Council tendered services, while there seems to be some aggression between the two companies with Western Greyhound having been banished from some bus stations (St Austell and Plymouth being two).  In addition, First have adopted very aggressive tactics against Go Ahead on Plymouth area services with their introduction of the Ugobus network.

Also, apparently Bristol are also on the market and the list given earlier is certainly not exhaustive-theyll sell anything at the right price.

If this is true, then about half a million people will shortly be organising street parties.  However, Bristol City Council have recently declared war on First and have announced their intention to either set up a TfL style quality partnership or introduce an ITA in the Bristol/Bath/Weston area - something that could frighten First away.  It will also be interesting to find out which part of First Somerset and Avon is up for sale.  My money when I first read the article was on services in the southern part of the county (the old Western/Southern National services) rather than the old Bristol Omnibus services.  However, if the above is true, I could be wrong.

[matty matt go]

Dose NX still own Travel London or did the sell up? if thay did sell up london cart see then bying First out

[Roy]

Dose NX still own Travel London or did the sell up? if thay did sell up london cart see then bying First out

It was sold to Abellio in 2009.

[winston]

Rotala for Chester as an absolute definite-they like former municipals, Arriva for Redditch as Rotala wouldnt be able to buy it anyway, EYMS-Whittle-for Kidderminster, Stagecoach for Northampton and I imagine Wigan will raise a lot and possibly they will sell further bits of London to raise the money.

Remember Rotala have got to find the money to buy anything. To buy Preston (there only ex municipal) they borrowed against the value of the premises and fleet, I would imagine that would be a lot harder with Chester.

Why do you think Rotala wouldn't be able to buy Redditch, but Stagecoach would be able to buy Northampton and EYMS Kidderminster? There is no logic there at all!

Much that Stagecoach buying Northampton probably would be good for passengers having a unified network the interfering busy bodies at the MMC or whatever they are called this week would be having fits, the same as they did when Stagecoach bought Preston.

I reckon there will at least one really big surprise.

Rotala in the past have simply issued more shares to raise funds for acquisitions / expansion, however this dilutes existing shareholders holdings every time they do that

[Justin Tyme]

It will also be interesting to find out which part of First Somerset and Avon is up for sale.  My money when I first read the article was on services in the southern part of the county (the old Western/Southern National services) rather than the old Bristol Omnibus services.  However, if the above is true, I could be wrong.

I thought it meant Somerset as it is now - Bridgwater and Taunton plus perhaps a bit more.  But if First got an offer it couldn't refuse for some other area, just as Stagecoach did for London from Macquarie some years back, who knows?

It will be fascinating to see how it all pans out - I wouldn't like to try to predict who will get what at this stage!

[winston]

First Group are going to be under even more pressure to find suitable buyers / achieve acceptable sale prices, as Stagecoach's proposed acquisition of North Devon (Barnstable) has today been referred to the MMC by the OFT. As a result Stagecoach have reportedly pulled out of the agreed deal, 

http://www.oft.gov.uk/?itemId=876309

[Justin Tyme]

First Group are going to be under even more pressure to find suitable buyers / achieve acceptable sale prices, as Stagecoach's proposed acquisition of North Devon (Barnstable) has today been referred to the MMC by the OFT. As a result Stagecoach have reportedly pulled out of the agreed deal, 

http://www.oft.gov.uk/?itemId=876309

Yes, Stagecoach have definitely pulled out, saying they cannot justify spending more money and management time on it - see http://otp.investis.com/clients/uk/stagecoach/rns/regulatory-story.aspx?cid=273&newsid=256311.  The OFT had said earlier today that the Competition Commission was expected to report by 24 December - a full 9 months after the sale/purchase agreement was announced.

The OFT decision is a serious problem for First - it makes selling to a competitor pretty much impossible.   It looks like this effectively kisses goodbye to Diamond buying Redditch or Whittles buying Kidderminster.

[winston]

First Group are going to be under even more pressure to find suitable buyers / achieve acceptable sale prices, as Stagecoach's proposed acquisition of North Devon (Barnstable) has today been referred to the MMC by the OFT. As a result Stagecoach have reportedly pulled out of the agreed deal, 

http://www.oft.gov.uk/?itemId=876309

Yes, Stagecoach have definitely pulled out, saying they cannot justify spending more money and management time on it - see http://otp.investis.com/clients/uk/stagecoach/rns/regulatory-story.aspx?cid=273&newsid=256311.  The OFT had said earlier today that the Competition Commission was expected to report by 24 December - a full 9 months after the sale/purchase agreement was announced.

The OFT decision is a serious problem for First - it makes selling to a competitor pretty much impossible.   It looks like this effectively kisses goodbye to Diamond buying Redditch or Whittles buying Kidderminster.

With North Devon as an example, who else is going to buy a rural operation currently locked head to head in competition with Stagecoach, there's now talk that First may simply decide to close the Barnstable operation & walk away as in Scotland East if First did decide to go down that route, Stagecoach will simply just register withdrawn services and get First network for free. First will have similar issues in Northampton also.

It looks as though First Group as seriously going to struggle to achieve the target £100 million asset disposals without selling anything that generates sizable profits

[Tomjusttom]

Would the OfT allow a partnership eg Arriva and Centrbus aka Centrebus Holdings but replace Arriva with say Stagey for the Northampton sale? Or even a sort of High Peaks style merger/sell off!

The main question is would it work and would it be worth it??

Wyvern I could see Arriva, Abellio, Go Ahead or even National Express trying to bid for parts.

[andy]

I'd love to understand the criteria for these OFT referrals and decisions....why for instance were Arriva allowed to acquire Stevensons all those years ago? If the criteria is that there has to be another significant operator or owner in the same area as the proposed purchaser, the industry is in serious trouble. It is the OFT that have allowed 20 to 30 post deregulation companies to end up in the hands of 3 or 4 so what do you do if only one of those companies wishes to make an acquisition? You can't force uninterested parties to buy!

This was always going to happen eventually, it has been coming for years. What we effectively have in many areas of the country is territory that won't support multiple operator activity, and that was always going to be the problem with extensive deregulation and privatisation, it's just that it's taken 25 years to reach fruition...

I bet the local authorities are bricking themselves that First deregister, leaving the very real scenario that Stagecoach register a presence on the lucrative corridors and leave the councils to tender everything else...in these times of austerity you can bet they will only cover a shadow of what's out there now. Stagecoach can effectively hold them to ransom without having to pay anything out for an acquisition either.

Who pays for this? The passenger, who ends up with a poorer choice of services at best or no service at worst, plus a rise in council tax.  Thatcher's legacy has at last arrived.