National Express set to buy Spain's biggest coach operator for £250m

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The Independent Online

National Express, the UK bus and rail group, is poised to make its first serious foray into Europe with the £250m takeover of Spain's biggest coach operator.

Discussions are at an advanced stage for National Express to buy the privately owned company Alsa, which controls more than half the Spanish coach market, and an announcement is expected early next week.

Based in Oviedo in northern Spain, Alsa is owned by the Cosmen family and has a fleet of more than 1,200 vehicles and 2,800 employees. Alsa has a turnover of £255m, making it slightly larger than National Express's coach division, which is expected to have revenues this year of about £200m.

In one fell swoop, the takeover will give National Express a presence on the Continent to rival that of Arriva, which has been slowly building up its European operations over the past seven years. The deal will also make Spain National Express's second-biggest market outside the UK, after its decision to sell off a large chunk of its public transport business in the US to concentrate on yellow school buses.

Alsa referred to the deal yesterday as a merger rather than a purchase, although it is understood National Express will pay cash for the Spanish company and absorb it into its operations. Sources said Alsa's skills and expertise in pricing, marketing and IT would make it a complementary fit with National Express.

There is limited scope for National Express to grow in the UK whereas the public transport market in mainland Europe, estimated to be worth €100bn (£68bn), is deregulating at a faster pace, presenting opportunities for established rail and bus operators.

Phil White, National Express's chief executive, has set his sights on expanding the company's presence in the London bus market. But the group, the UK's biggest rail operator with eight passenger train franchises, faces the loss of its Gatwick Express route while its bid for the Thameslink line between Bedford and Brighton has been referred to the Competition Commission.

Arriva has tended to concentrate on buying smaller rail and bus businesses in northern European markets such as Germany, Denmark and the Netherlands, although it also has a small presence in Italy, Spain and Portugal. Its European turnover this year is likely to reach £600m.

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