Diamond Bus North West

[gilesbus1]

RE: Diamond Bus North West

(13/07/2019 23:42)Winston Wrote:  With NX UK Bus sales, the sales you're referring to Arriva were purchases made by WMT prior to flotation & eventually merger with NX in 1993, they were sold to Cowie in 1996 ish (which became Arriva), those ops sold were County Bus & Coach, Westlink & North East Bus, they were all non core / didn't match the urban high frequency characteristics of WMT etc. Westlink in particular was only acquired as a potential stepping stone to buy a former London Buses Op (but prices got stupid) and it didn't happen. WMT also bid for GM Bus North, WMT bought those ops to fatten itself up prior to flotation & not be just reliant on the West Midlands. Travel London was sold in 2009 due to needing cash when NX Group came close to collapse due to over stretching itself following Richard Bowker's £450 million acquisition of Continental Auto in Spain & unrealistic winning bid for the East Coast Main Line. During all that period NX have had a number of different CEO's, with different strategy's. At present, the focus for expansion has been US & Spain plus contracted ops, as there's been more opportunities abroad.

NX's operations in US are all school buses/transit buses & paratransit - no coaches, Morocco is all buses, as is Bahrain. There's no Eastern European operations. Only European operations are Spain via ALSA & German rail Franchises. NX UK Coach & Bus generate pretty equal profits & turnover isn't that far apart either, but UK ops are dwarfed by US & Spain. NX seem keener to grow UK Bus of late with NXWM bidding for various tenders inside/outside of the West Midlands, expanding in to Staffordshire with commercial extensions and I believe they are also interested in the former Ring & Ride Accessible Transport Group that went in to administration and are thought to have bid for that. Coincidentally, they have just re-named an existing limited company via companies house on 2nd July:

WEST MIDLANDS ACCESSIBLE TRANSPORT LIMITED
https://beta.companieshouse.gov.uk/company/02327223

Top of the shopping list for First ops will First Glasgow, First West Yorkshire, First Bristol etc, with First Leicester is a decent earner as well. South Yorkshire is also a large op which could be turnaround under different management. There's never been this much up for sale at anyone time, this is why I think NX may surprise and will be actively involved. Big urban ops like those don't come on the market very often. First may want top dollar, but there will be a limited number of buyers for their biggest ops, and the timing of Arriva sale doesn't help matters either. First are not exactly in the driving seat, major investors are tired excuses and little happening. Not sure how true, but on another forum NX management have supposedly been sighted at First Glasgow's Caledonia Depot. It will be interesting to see what Greyhound gets sold off for (most likely to Flixbus or PE), when Moir Lockhead supposedly snubbed Stagecoach's £700 million offer to buy it some years back.

Arriva Group will not be broken up & sold off by DB, it will be sold as a group or possibly split in to two i.e. UK & Europe at most. DB needs to reduce their debt pronto.

What's likely with Arriva and indicated by the bids so far is that it will be bought out by Venture Capitalists, they buy and break up business' in order to squeeze maximum returns out of them, it can be done in all sorts of different ways, I also suspect depots might close as a return can be made on selling the depots off as they are just merely seen as another asset from which a source of revenue can come in from. I think the maximum time a venture capitalist would retain a business for would be five years and eventually then you would see the movement in subsidiaries as individual sales. I suspect a Venture Capitalist might also buy First UK Bus and do likewise, but I suspect FirstGroup want out quickly so are open to any offers for subsidiaries so long as they meet there valuations they have in there head.

Operators will come in one the Venture Capitalists are out of the way, but be warned break ups by Venture Capitalists can sometimes be quite strange by structure, e.g. all the Scottish operations of FirstGroup as one separate sale for example, or you could have Glasgow Caladonia depot goes to one buyer, Dumbarton to another and everything else to somebody else as its all open to negotiation, sometimes done with other venture capitalists, e.g. sometimes one business lot passes on to another business lot owned by the same venture capitalist.

Quite often the first infrastructure to go on take over by a venture capitalist is the head office. Any property left close to a City Centre or a housing site might go quickly as well, as the values of them are potentially high.

If Hyde Road Depot in Manchester for example was owned by a Venture Capitalist the likelihood would be that it would be sold to a Construction Company for a retail park given the size of it and its location at the side of a main road on a major corridor into Manchester and the vastness of the site there, much of which is mothballed and out of use, and somehow its surprising Stagecoach haven't done that over time.

Having said that though mileage costs are kept low by having Hyde Road as are wage costs.

Venture Capitalists though may appear or have short periods of time when they expand the business, probably in order to up the price of a particular unit so it sells better later on. This is were Arriva appears to be going as a list was given by Coach & Bus Week which shows three of the four bidders so far to be Venture Capitalists, including one who own Canary Wharf in London's docklands and no it doesn't been Canary Wharf might get demolished it merely means its an asset in a portfolio.

Keolis who is the only Transport Group to place a bid so far is potentially an outsider, although its recent winning of the Metrolink contract in Manchester might show that the UK is somewhere they want to grow, but outbidding Venture Capitalists and Banks with vast capital resources will be very difficult. This I think is a new phase in the bus and train market and one which given the difficulties and uncertainties that currently exist in the market is probably the most likely outcome.