Diamond Bus North West

[mikestone]

RE: Diamond Bus North West (formerly South Lancs Travel)
http://www.londonstockexchange.com/excha...11666.html
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The Proposed Acquisition



The Proposed Acquisition comprises a purchase of a freehold site and 18 buses from a business based in Greater Manchester. The Proposed Acquisition would be a strategic acquisition aimed at capitalising on the re-franchising opportunities in Greater Manchester. The Directors believe that, should it complete, it will enable Rotala to significantly grow its operations in this area and potentially double its bus capacity. No additional overheads are expected to be required as a result of the acquisition and the Directors believe that the Company will benefit from additional sales, gross profit and EBITDA contributions of approximately £2.0 million, £0.4 million and £0.2 million respectively under Rotala's ownership, in the first full year following completion of the Proposed Acquisition.



The expected cost of the Proposed Acquisition is approximately £1 million, including the necessary working capital and capital expenditure associated with the acquisition, which will be satisfied from the net proceeds of the Subscription.



Other acquisition opportunities



The Company is also currently in negotiations relating to other acquisitions, all of which are at a preliminary stage, including:



Opportunity A



· A further strategic acquisition in Manchester that could increase Rotala's bus capacity to 200 vehicles, representing approximately 10 per cent. of the local market



· Cost of acquisition expected to be approximately £4.6 million, (financed through equity and debt)



· Estimated revenue and EBITDA contributions of £11.0 million and £0.9 million in the first full year following completion of such acquisition



Opportunity B



· Acquisition of airport based bus business



· Common customer base with existing business



· Would use existing spare depot capacity and overhead



· Cost of acquisition expected to be £2.2 million, (financed through equity and debt)



· Historic sales and EBITDA of £6.1 million and £0.5 million*