Australian bank boards London buses

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The Independent Online

Australia's acquisitive Macquarie Bank has added to its portfolio of European transport assets after agreeing to buy Stagecoach's London bus division in a deal worth £263.6m.

Macquarie owns a raft of transport-related assets in Europe including Brussels International airport. In the UK, it owns stakes in Bristol and Birmingham airports and the Isle of Wight ferry, as well as the M6 toll road and the Moto roadside restaurant chain.

Macquarie will take over Stagecoach's 1,300 London buses that carry about 300 million passengers a year across 80 routes. The two bus lines it has acquired have a market share of about 16 per cent in London, according to UBS. It competes against Go-Ahead, National Express and FirstGroup in the region.

Macquarie said in a statement the London bus business "benefits from strong cash-flow visibility". Macquarie hunts out assets with steady income streams and dominant market positions.

Stagecoach will focus on its regional bus line business and will look for bolt-on acquisitions after the sale. Over the past year, the company has acquired bus businesses in Yorkshire, Merseyside, Lincolnshire and Tayside.

A spokesman for Stagecoach said the London business represents about 20 per cent of its overall bus business, and it decided it was in the best interests of shareholders to accept the cash offer, given the long-term prospects of the business.

Stagecoach, based in Perth, Scotland, will make a consolidated gain of about £120m as a result of the deal after contributing £60m to a new pension scheme for its 4,300 London bus staff. It plans to use the funds to reduce debt and fund acquisitions in the bus and rail sectors.

The London bus routes accounted for about £224.6m in revenue in the year to April 2006, and pre-tax profits of £17.9m.

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