The purchase continues the consolidation that has been gathering pace in the bus industry recently. PMT, which is based in Stoke-on-Trent, was one of several management buyouts from the National Bus Company, which was privatised in 1986. PMT made pounds 3m before tax last year on turnover of pounds 26m.
The deal takes Badgerline, which was also a buyout from National Bus Company, into the North of England for the first time. Badgerline is based in the South-west and with a fleet of about 2,300 vehicles, it operates bus services in the South, the Midlands and Wales.
It has not been active in the acquisition market, unlike the other big quoted bus company, Stagecoach, which also floated last year. Badgerline has been hampered by high levels of debt. It will be left with borrowings of about one and a half times its shareholders' funds after the deal.
Badgerline is paying for PMT with a mixture of cash, debt and equity. The vendors will receive pounds 8m worth of new Badgerline shares, pounds 7m in cash and pounds 8m in loan notes.'
Mike Moors, chairman of PMT's parent company, will end up with about 5.4 per cent of the enlarged share capital of Badgerline, worth more than pounds 20m, as a result of the sale. He led the PMT buyout in 1986 and ended up with almost 70 per cent of the shares.
Mr Moors will not be staying with the company, but Trevor Smallwood, Badgerline's executive chairman, said the rest of the executive team would continue to run PMT. 'We have a high regard for the operating management team, led by Steve Ellis, and we look forward to welcoming them to the group.'
Mr Smallwood added that the acquisition was an exciting and important step for Badgerline. 'It will be our single biggest operating subsidiary and gives us a strong presence in an area of the country which we have targeted for some time,' he said. PMT operates about 500 buses in Stoke, Crewe, Birkenhead and the Wirral.
The company also announced that it was on target to reach the profits before tax of pounds 12.6m for 1993 forecast in its prospectus. The results are due early next month. The shares rose 5p to 124p.Reuse content