The transport giant Stagecoach is re-entering the London bus market after buying back a business it sold in 2006 for a fraction of the price.
It will pay Macquarie £59.5m for East London Bus Group, the capital's third-largest bus operator, just four years after it sold the business to the Australian bank for £264m. At the time of the sale, Macquarie said the bus company was desirable for its predictable cash flow. But profits sank steadily and the company was sold as part of a "pre-pack" administration conducted by KPMG.
Brian Souter, the Stagecoach chief executive, said: "We operated a successful bus business in London for several years and are pleased to re-enter the London bus market at what we consider to be an attractive price."
Mr Souter said that while he recognised the challenge presented by the ailing East London Bus Group, he was relishing the chance to turn around a struggling business. His plan is to both improve the operational performance of the company and to cut its back-office costs through synergies with the parent group.
"Through our previous ownership of the business, we are familiar with the regulated London tender environment and have a track record of operating successfully and profitably in this market," Stagecoach said in a statement.
The £59.5m cost price, which will be funded from cash and Stagecoach's existing, undrawn bank facilities, includes the settlement of outstanding inter-company liabilities and East London Bus Group's £6.7m in cash held at the time of the sale.
East London Bus Group operates 1,400 buses from 10 depots across the capital and maintains a 15 per cent share of the market. For the year to April, it generated revenues of £254m, mostlyfrom a fixed-fee contract with Transport for London.