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Badgerline links with GRT


Rationalisation of the privatised bus industry gathered pace yesterday with the announcement of an agreed merger between Badgerline and GRT to create Britain's second-biggest operator.

Shares in GRT shot up 13p to 269p on the news, with Badgerline rising 5p to 138p. The prospect of further activity in the sector also sent shares in Go-Ahead, the North-east-based bus group, 15p ahead to 191p.

The new group, to be called FirstBus, will have annualised turnover of around £350m and command 13.5 per cent of a market outside London estimated at £2.4bn in 1994.

Trevor Smallwood, the Badgerline chairman who will chair FirstBus, said that as a leading UK bus company, they would "be in a better position to deliver value to shareholders than either company would have been on their own".

They would be looking to achieve cost savings on the £95m annual purchases of the combined group, using its increased buying power, and would be seeking acquisitions, he said.

With GRT's operations mostly based in Scotland and Badgerline's in England and Wales, the companies do not expect any difficulties with the Office of Fair Trading, with which they are in discussion.

FirstBus will remain smaller than Stagecoach, the market leader, and will have relatively little exposure to the key London market for buses.

Derek Scott, the finance director of Stagecoach, pointed out that this was worth an additional £600m in total and warned that prices being paid for companies in the sector were rising.

The merger will see Badgerline shareholders receiving new FirstBus shares on a one-for-one basis, with GRT holders being offered 1.9023 for one.

Directors and employees currently own somewhat over 20 per cent of Badgerline, while for GRT the equivalent figure is 49 per cent, suggesting the deal should not meet much opposition from shareholders.

The Scottish group yesterday estimated pre-tax profits were £8m in the year to March, up from £4.4m the previous year. It is paying a second interim dividend of 3p to take the total for last year to 4.4p.

Investment column, Page 34