Stagecoach pays pounds 1.21bn for largest US bus operator

STAGECOACH, the transport company, yesterday launched an agreed takeover of Coach USA, the largest bus operator in the US, in a deal worth $1.88bn (pounds 1.21bn).

The deal is the second largest ever completed by Stagecoach, already the UK's biggest bus and rail operator, and brings it one step closer to its ambition of becoming an international transport group.

Brian Souter, the executive chairman of Stagecoach who holds shares valued at over pounds 400m, said the deal gave the group opportunities in a consolidating US bus sector. It would also give Stagecoach a presence in a market where rail privatisation was "moving up the agenda", he said.

In spite of being the largest US bus operator, Coach USA has only 2 per cent of a market in which more than 5,000 bus companies operate.

Growing by acquisition, the Houston group has bought more than 70 smaller companies since it listed in New York in 1995.

Shares in Coach USA have plummeted since last year, falling from a peak of $45 to less than $18. US investors were concerned that the group lacked the financial muscle to be a consolidator in the US market.

Stagecoach will pay $42 a share for the US company, a 41 per cent premium to its value before 7 June when takeover speculation first took hold.

Larry King, chairman and chief executive of Coach USA, will keep his management role. He and his fellow board members have pledged a total of 8 per cent of the group's shares to the Stagecoach offer.

Mr King said he had spoken to other bidders for the group, but he played down the possibility of a counter-bid. Coach USA has promised to pay a $35m fee should another bidder emerge.

Mike Kinski, group chief executive of Stagecoach, said the deal allowed Stagecoach to cash in on the $40bn bus and train market in the US.

The US coach market has been boosted by growing numbers of US pensioners, a big source of custom for coach tour operators.

Municipal governments are also outsourcing light rail and bus operations to private operators. School buses, still 90 per cent owned by the state, are slowly being privatised.

Until now, only one other UK transport company, National Express, has made acquisitions in the US.

"What Coach USA offers at the moment is a tremendous opportunity to enter the market at a very exciting stage of its consolidation," Mr Kinski said.

The City yesterday welcomed the deal, marking Stagecoach shares up 3p to 226.5p.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

Reach Volunteering: Trustees with Finance, Fundraising and IT skills

Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent