Takeover nets bus workers pounds 35,000

Capital gains: Employee-owners, from scientists to drivers, reap rich rewards from sale of shares
More than 2,000 Glasgow bus drivers, mechanics and cleaners were last night celebrating a windfall gain that stands to make each of them pounds 35,000 richer after their company accepted a takeover approach from a rival bus company.

Employee-owned Strathclyde Buses, which operates a fleet of almost 1,300 vehicles in the Glasgow area covering a population of 1.7 million, is being sold to FirstBus, Britain's second biggest bus company, for up to pounds 110m.

"I'm obviously delighted for our members," said Des Divers, a convenor for the Transport & General Workers' Union in Scotland and himself one of the lucky employee shareholders.

"pounds 35,000 less tax isn't going to last forever, but I dare say many of the staff will be taking a well-earned holiday."

Not all the bus drivers, however, will be rushing to the travel agents to book two weeks on the Algarve. About 1,400 of them will miss out on the bonanza because they failed to invest pounds 300 when Strathclyde Buses was privatised three years ago.

The FirstBus deal represents an 11,700 per cent return on that original investment - the sort of payback that highly-paid investment bankers and share traders in the City can only dream about.

Staff bought 6,000 shares at 5p each when the bus company was sold by Strathclyde Regional Council in 1993. The FirstBus offer now values those same shares at a 585p, including a special dividend payment.

"We see it more as a payback than a windfall," Mr Divers continued. "British bus workers have suffered a lot in the last 10 years. We didn't go into privatisation to make money, we were forced into it through de-regulation. With this deal we have guaranteed our pensions and long-term job security."

Mr Divers said the union would be recommending the deal to its members, who own almost two-thirds of the bus company.

The Glasgow bus drivers' joy may not be shared by passengers in the city, however. FirstBus yesterday indicated it would be putting up fares. "They will probably have to move, but not by much above the rate of inflation," admitted FirstBus chief executive, Moir Lockhead.

The deal could also run into regulatory problems as FirstBus now has an estimated 50 per cent of the Scottish bus market.

"They will be running buses bumper-to-bumper from Paisley to Berwick- on-Tweed," claimed Brian Souter, chairman of Stagecoach, Britain's biggest bus operator.

Mr Souter, who is standing down as a director of Strathclyde Buses, admitted Stagecoach had also been interested in bidding but decided instead to sell its 20 per cent stake to FirstBus at a pounds 15.6m profit.

The Strathclyde deal is the latest in a series of Lottery-like scoops for bus drivers across the country who had the foresight to buy shares when their companies were privatised.

Staff at GM Buses South in Manchester each became pounds 10,000 better off after Stagecoach bought their company earlier this year. But that was small beer compared to the pounds 38,000 some Birmingham bus drivers made last year when West Midland Travel fell to National Express for pounds 244m.

FirstBus was created last summer by the merger of Bristol-based Badgerline and Grampian Regional Transport of Aberdeen. It has expanded rapidly through a string of acquisitions and recently increased its share of the national bus market to 16 per cent by paying pounds 52m for bus companies in Manchester and Portsmouth.

FirstBus also owns a 24.5 per cent stake in Great West Trains, which runs rail services out of Paddington in London, and plans to bid for more rail franchises as they become available.

Investment Column, page 20