Stagecoach poised to sell Porterbrook
Monday 20 March 2000
Stagecoach, the transport company, is believed to be close to selling its Porterbrook train-leasing subsidiary for £1.3bn to Abbey National, the UK mortgage bank.
The deal, which is expected to be finanlised in the next two weeks, would help boost Stagecoach's flagging share price, which has plunged almost 50 per cent this year but on Friday closed up 7p at 108.5p.
Officials at both Stagecoach and Abbey National refused to comment on the speculation. But earlier this month, Stagecoach confirmed reports that it was reviewing strategic options for Porterbrook, which is reported to have an annual turnover of about £270m.
Stagecoach said last December that it was looking for a partner to help it compete with Porterbrook's main rivals; HSBC Rail and the Royal Bank of Scotland-owned Angel Train Contracts.
The group cited the main UK retail banks, Japanese finance houses and GE Capital, the financial services arm of General Electric, the US conglomerate, as possible contenders.
The deal will mean a major move into lease finance for Abbey National, which is also understood to be in talks with Deutsche Bank to buy Bouillon Aviation, the Seattle-based air transport company, for about £250m.
Stagecoach, which is headed by Brian Souter, one of Scotland's richest businessmen, could use the proceeds from the Porterbrook sale to help it expand internationally, possibly by bidding for Laidlaw, the company benhind the Greyhound bus operation. Alternatively, Mr Souter could use the money to buy back shares or to take the company private.
Stagecoach has lost the favour of the City in the past year because of worries over its Coach USA acquisition and a general shunning of the transport sector. The situation was not helped by the sudden departure of Mike Kinski, the former chief executive.
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